Concerning auto insurance, what is meant by “full coverage”?

< Back to Assignment Attempts: Average: / 1 2. Introduction to the foreign-currency exchange market In an open economy, why i

Fofino [41]

Answer: Net capital outflow is determined by the real interest rate, not the real exchange rate

Explanation:

In the foreign-currency market, the supply of dollars is not dependent on the real exchange rate and so the supply curve will be vertical to indicate this independence by showing inelasticity which means that it is unaffected by the variables in the foreign-currency market.

Supply of dollars is rather dependent on the real interest rate.

This is because dollars get into the world economy (supply of dollars) as a result of investments by Americans into markets abroad in the form of Net Capital Outflow. If American real interest rate is low, Americans will invest in other countries with a higher rate of return thereby pumping more dollars into the world economy.

7 0

3 years ago

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflat

brilliants [131]

Answer:

3%

Explanation:

Data provided as per the question

Nominal interest rate = 100%

Inflation rate = 7%

The computation of the real interest rate is shown below:-

Real interest rate = Nominal interest rate - Inflation rate

= 10% - 7%

= 3%

Therefore, for computing the real interest rate we simply deduct the inflation rate from the nominal interest rate.

7 0

3 years ago

An auto company decided to relocate its offices from Huntsville, Alabama to Orlando, Florida. The human resources manager of the

yawa3891 [41]

In the given case the human resource manager will be considered frictionally unemployed. Thus the correct answer is B.

<h3>What is unemployment?</h3>

Unemployment is the situation in which an individual is unable to find any job or occupation to meet the financial needs of life after having all the required talents and qualifications.

Frictionally unemployment is a situation when an individual is relocating to another job from one job. In the given situation the manager is not terminated.

The human resource manager resigned from the job due to obligations from family. This shows that she has the skills and talents to pursue and join another job. The period in which she is searching for a job is considered frictional unemployment.

Learn more about unemployment, here:

brainly.com/question/14227610

#SPJ1

5 0

2 years ago

Why is sustainable tourism important

Ksenya-84 [330]

Answer:

It's important because your making a change.

Explanation:

Sustainable tourism is the concept of visiting somewhere as a tourist and trying to make a positive impact on the environment, society, and economy.

4 0

4 years ago

Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be $300,000, operating costs to

julia-pushkina [17]

Answer:

b. 2.59%

Explanation:

<u>The assets are 200,000</u>

it will be 25% debt = 200,000 x 25% = 50,000

and 75% equity = 200,000 x 75% = 150,000

The debt will generate 8.8% interest expense

50,000 x 8.8% = 4,400

Income for the expected project under Plan A

sales revenue 300,000

operating cost 265,000

EBIT 35,000

interest expense 4,400

EBT 30,600

income tax 10,710

Net income 19,890

TE = times interest earned = EBIT /interest expense

35,000 / 4,400 = 7,95 It achieve the requirement of 4.5 or above

ROE for plan A net income / equity

19,890/150,000 = 0,1326 = 13.26%

<u>Under Plan B</u>

We will take as much debt as we can until TIE = 4.5

so:

EBIT / interest expense = TIE

35,000/interest expense = 4.5

35,000/4.5 = 7.777,78

This will be the interest expense for plan B

Now we calculate net income:

(EBIT - interest) x (1- tax-rate) = net income

(35,000 - 7,777.78) x (1-35%) = 17.694,443

and for the ROE for plan B first, we need to check the capital structure:

The interest expense are the 8.8% of the debt so

debt x rate = interest expense

interest expense / rate = debt

7,777.78/0.088 = 88.383,86

Asset = debt + equty

200,000 = 88,383.86 + equity

200,000 - 88,383.86 = equity = 111,616.14‬

Now, we got the capital structure

debt 88,383.86

equity 111,616.14

ROE for Plan B

17,694.443 / 111,616.14 = 0,15852943 = 15.85%

now we compare both ROE

Plan A 13.26%

Plan B 15.85%

Difference 2.59%

Using Plan B will increase the ROE for 2.59%

6 0

3 years ago