If the pure expectations theory is correct (that is, the maturity risk premium is zero), which of the following is CORRECT? a. A
1 answer:
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Answer:
1) 10%
2) Depends on the selling price
Please see the attachment
Explanation:
We have 2 scenarios. In both cases we have to calculate the income as the product of the selling price by the units sold, and then we must calculate the increasing percentage to compare the actual value with the last year value.
Let's see the attachment and consider that:
P is the selling price of the sofas
x is the units sold
So, the income is the result of the selling price, by the units sold, respectively for each year. Then, the increase is the ratio between the actual year income minus last year income, over last year income. Finally, the increase percentage is the result of multiplying the increase value, by 100.
We can conclude that for the first scenario, the selling increase percentage is 10%, meanwhile, for the second scenario, the selling increase percentage depends on the selling price; that means, the higher the selling price, the increase percentage will be lower, but anyway, there will be increase.
