Answer:
C. Leverage increases expected EPS and ROE (but increases their riskiness too)
Explanation:
C. Leverage increases expected EPS and ROE (but increases their riskiness too)
Expected EPS(All-equity Plan A) = $45m/20m = $2.25
Expected EPS(Plan B) = [$45m - ($150m × 0.08)/14m = $2.36
Expected EPS(Plan C) = [$45m - ($225m × 0.08)]/11m = $2.45
Answer:
6.5017%
Explanation:
Given that,
Total cost of a college education when your child enters college in 16 years, Future value = $200,000
Amount today to invest, present value = $73,000
Time period = 16 years
Therefore,
Annual rate of interest:
r = 6.5017%
Therefore, the annual rate of interest you must earn on your investment to cover the cost of your child’s college education is 6.5017%.
Answer:
Covered Interest Arbitrage
Explanation:
The Covered Interest Arbitrage is a term that refers to arbitrage trading approach in which a stockholder take the chance to gain advantage from the disparity in interest rate between two nations.
The trading strategy helps in its verifiability, quantifiability, consistency, and objectivity
It is designed to profit the investor from the differences in interest rates between two countries, when buying and selling foreign currencies.
When a market is small or there's a high level of competition, there's a possibility that the earnings on covered interest rate arbitrage won't yield much.
When equilibrium GDP is at full-employment GDP and autonomous consumption declines, firms are induced to reduce production output thus moving the level of GDP downward.
<h3>What is
equilibrium GDP?</h3>
Gross domestic product (GDP) is a crucial economic metric for assessing a country's overall financial situation. It is determined by summing up the entire monetary value of all the goods and services produced in a nation over the course of a year.
Equilibrium GDP is the level of GDP at which total demand and total supply are balanced.
An economy is in a recession if its real GDP at the moment is lower than the output at full employment. An economy is in a boom if its real GDP at the moment is higher than its output at full employment. We say the economy is in long-run equilibrium if the current output is equivalent to the output at full employment. The output is not excessively high or low. It fits perfectly.
To know more about equilibrium GDP refer to: brainly.com/question/13122168
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