10,000-15,000 american dollars
Answer:
Following are the factors in the economy that affects the cost of money:
- Inflation
- Required return of the investors on the additional risk
- Systematic risk in the economy
- Duration of lending
- Credit Spread
Explanation:
If the inflation rate increases then the required return would be compensation for inflation and required return.
The higher is the risk associated with the investment the higher would be the investor's required return.
According to the Capital Asset Pricing Model, the company compensates the investor for the systematic risk, not for the unsystematic risk that he faces because CAPM assumes that the investor has diversified portfolio of investment.
If the amount lend is for greater duration, then there is a risk that the borrower will default payments. There is another explanation which is that there is higher chances of loss of opportunity due to lending amount for greater duration.
Credit Spread is the measure of the risk that the company will be unable to pay interest on loan or principal amount or both. So as we know higher the risk associated with the investment, the higher is the Required return demanded by the investors.
In a case whereby A firm is forecasting the sales of carpets based on the number of building permits issued in their county, the technique they were using is Associative model.
<h3>What is
Associative model?</h3>
The associative model of data can be described as the data model that is been used for the database systems.
It should be noted that These models involve encompassing attributes with respect to thing, , hence In a case whereby A firm is forecasting the sales of carpets based on the number of building permits issued in their county, the technique they were using is Associative model.
Learn more about Associative model at:
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Answer:The two main branches of economics are microeconomics and macroeconomics
Explanation:
Answer:
Rate of return < current YTM
Explanation:
In order to determine whether the current YTM is greater or less,we need to first of all determine the current YTM using excel rate formula as shown below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon payments the bond pay which is 15
pmt is the annual coupon payment of $100(10%*$1000)
pv is the current price of $890
fv is the face value of $1000
=rate(15,100,-890,1000)=11.58%
Since the rate of return is 8.8% while the current YTM is 11.58%,the third option is correct
