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Murljashka [212]
2 years ago
7

A one-year and two-year bonds currently pays 1.4% and 1.2%, respectively. What is the expected interest rate on a one-year bond

next year according to the liquidity premium theory if the two-year term premium is 0.1%
Business
1 answer:
yulyashka [42]2 years ago
5 0

Answer:

Expected Interest Rate = 1.8%

Explanation:

The computation of the expected interest rate on a one year bond is shown below

Interest Rate expected in nth year would be

= (Sum of individual interest rates in n years) ÷ n + liquidity premium in nth year

1.6% = (1.2% + Expected Interest Rate) ÷ 2 + 0.1%

1.5% × 2 - 1.2%= Expected Interest Rate

Expected Interest Rate = 1.8%

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<u>Answer:</u> the buying power of the dollar would: decrease.

<u>Explanation:</u>

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Purchasing power can be compared with the salaries received 50 years ago and current salaries. Though the current salaries have increased the prices of the goods have also increased accordingly. Which can also be termed as increased cost of living.

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3 years ago
Sarah is a 50 percent partner in the SF Partnership and has an outside basis of $56,000 at the end of the year prior to any dist
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Answer:

A. $0 gain, $36,000 basis

Explanation:

In the distribution, from the information given, Sarah does not recognize any gain or loss.

However, given that

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Then receives $20000 from distribution after reallocating her basis in SF to cash in amount equal to distribution

Therefore,

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3 0
3 years ago
Read 2 more answers
You wish to make a deposit and have these bills: 11 ones, 4 fives, 4 tens, and 4 twenties. You also have 6 nickels, 12 dimes, an
Bad White [126]

Answer:

$264.00

Explanation:

Calculation to determine What will you enter on the NET DEPOSIT line

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Second step is to add up the amount she has in the account.

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4 fives = $20

4 tens = $40

4 twenties = $80

6 nickels = $0.30

12 dimes = $1.20

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Total 156.5

Now let calculate What will you enter on the NET DEPOSIT line

NET DEPOSIT line=($137.75+156.5)

NET DEPOSIT line=$294.25

NET DEPOSIT line=$294.00

Therefore What will you enter on the NET DEPOSIT line is $294.00

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Answer:

Explanation:

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= 12150

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3 years ago
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