Answer:
Juan is a small-business owner. He has some cash flow and wants to invest in a new project. Juan’s assistant provides an evaluation and estimates the nominal returns that Juan would earn if he invests in the project. Juan reads the evaluation and makes the decision based on the real terms after factoring in inflation - Yes, this is a good financial decision.
Explanation:
The annual percentage of profit earned on an investment, adjusted for inflation is known as the real rate of return.
The nominal interest rate is the interest rate before taking inflation into account
Inflation reduces the value of money. Thus, calculating a rate of return in real value rather than nominal value, especially during a period of high inflation, gives a clearer picture of an investment's success.
The real rate of return adjusts profit for the effects of inflation, thus, it is a more accurate measure of investment performance than nominal return.
Usually, nominal rates are higher than real rates of return except in times of zero inflation or deflation.
Juan actually considered inflation rate, and made his decision on investment based his on real rate of return , and not nominal rate of return. Thus, he made a good financial decision.
Answer:
A mandatory recursive relationship
Explanation:
The economic concept that is included in this question can be refered to as positive externality.
<h3 /><h3>What is positive externality?</h3>
This has to do with the term that denotes the benefit that a party would have due to the fact that they engaged in an activity.
In this case, a person would be more likely to get more jobs and more appeal to unterviewers because they have more skills.
Read more on positive externality here: brainly.com/question/477170
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Answer:
Explanation:
The committee began its work by identifying the most significant issues confronting coastal environments. This assessment was based on the collective experience of committee members as well as perspectives gained from background documents. The recently completed Regional Marine Research Plans (see Appendix C) provided the views of scientists and environmental managers from the major coastal regions of the United States. Also, the Group of Experts on the Scientific Aspects of Marine Pollution listed the most serious problems affecting the marine environment around the world (GESAMP, 1990). Some of the issues highlighted in the committee's list have been recognized for decades. The committee believes that achieving further significant progress in addressing these issues will require joint agency efforts spanning terrestrial and coastal systems. Such efforts are needed urgently and are now possible under the aegis of the Water Subcommittee.
The committee chose issues that are characterized by their wide geographic scope (e.g., are shared by many regions of the country) and that address the problems of (1) sustainable use of resources, (2) reversibility of effects, and (3) anthropogenically mediated deterioration of coastal systems:
eutrophication,
habitat modification,
hydrologic and hydrodynamic disruption,
exploitation of resources,
toxic effects,
introduction of nonindigenous species.
Answer:
Stock Y is overvalued and Stock Z is undervalued.
Explanation:
The stock is fairly valued when the required rate of return on the stock is equal to its expected return. If the expected return on the stock is more than the required rate of return, the stock is undervalued and vice versa.
The required rate of return on the stock is calculated under the CAPM approach suing the following formula.
r = rRF + Beta * rpM
Where,
- rRf is the risk free rate
- rpM is the risk premium on market
r of Stock Y = 0.052 + 1.3 * 0.077 = 0.1521 or 15.21%
The required rate of return of Stock Y (15.21%) is more than its expected rate (14.9%) which means the stock is overvalued.
r of Stock Z = 0.052 + 0.95 * 0.077 = 0.12515 or 12.515%
The required rate of return of Stock Z (12.515%) is less than its expected rate (12.8%) which means the stock is undervalued.