Answer:
<em>For the 2 year treasury securities it was 7%, and for a 3 year treasury securities it was 7.33%</em>
Explanation:
<em>From the example, </em>
<em>The real risk rate of interest is= 4%</em>
<em>The inflation expectation of this year=2%</em>
<em>Inflation expected for the next 2 years=4%</em>
<em>Maximum risk premium=0</em>
<em>Therefore</em>
Rt= r* + (Inflation/ year)
Rt2= 4 + (2 + 4 / 2) = 7%
<em>Rt3= 4 + (2 + 4 / 3) = 7.33% </em>
Answer:
AD2 and then to AD3
Explanation:
If the investment is continued to increase by federal reserve it would only be feasible when money creation decreases the interest rate.
The aggregate demand would then be expanded and the aggregate demand curve shifted to the right. The necessary increase in aggregate demand must be such that aggregate shifts in demand curve from AD1 to AD2 to AD3.
Answer:
The issue price of the bonds is $ 473,171 .
Explanation:
The value of bond or issue price can be calculated by discounting all future cash flow using effective rate of retun. Detail calculations are given below.
Future Value = Redemption present value (RPV) + Present value of interest (PVI)
RPV = 500,000 (1+10%)^-10 = $ 192,772 -A
PVI = 22,500 * Annuity factor =$280,400-B
Future Value = A + B = $ 473,171
Annuity factor = (1- (1+i%)^-n)/i% = (1- (1+10%/2)^-20)/(10%/2) = 12.4622
Answer:
B) She has to share all of the profits with the partner.
Explanation:
A partnership is a business owned by two or more parties while a sole proprietorship is owned by one person. In the former, decisions are made jointly and the process might take long since all partners must consent to it. Another disadvantage is that all profits are shared between or among all partners unlike a sole proprietorship where the owner takes all the profits.