Answer:
a. A 1% increase is a positive output gap decreases the unemployment rate by 0.5%
Explanation:
Okuns law looked at the relationship between unemployment and output empirically.
It states that that for every 1% increase in the unemployment rate, positive output gap falls by roughly 2%.
I hope my answer helps you.
Answer: $43
Explanation:
The current stock price will be calculated as:
= Do(1 - g) / (Ke + g)
where,
Do = $ 4.90
g = 2.50%
Ke = 8.60%
Po = [4.90 - (1 - 0.025)] / [0.086 + 0.025]
Po = 4.7775 / 0.111
Po = $43
The price of one share of the stock today will be $43
Answer:
The loss of the financial institution is $413,000
Explanation:
Let's say that after 3 years the financial institution will receive:
0.5 * 10% of $10million
= 0.5 * 0.1 * 10000000
= $500,000
Then, they will pay 0.5 * 9% of $10M
= 0.5 * 0.09 * 10000000
= $450,000
Therefore, their immediate loss would be $500000 - $450000
= $50000.
Let's assume that forward rates are realized to value the rest of the swap.
The forward rates = 8% per annum.
Therefore, the remaining cash flows are assumed that floating payment is
0.5*0.08*10000000 =
$400,000
Received net payment would be:
500,000-400,000= $100,000. The total cost of default is therefore the cost of foregoing the following cash flows:
Year 3=$50,000
Year 3.5=$100,000
Year 4 = $100,000
Year 4.5= $100,000
Year 5 = $100,000
Discounting these cash flows to year 3 at 4% per six months, the cost of default would be $413,000
Answer:
Mass marketing
Explanation:
Mass marketing can be defined as an approach which is directed towards attracting a large number of the audience. It aims to address the highest number of potential customers while ignoring niche demographic differences. The strategy involved in this type of marketing strategy focuses on a higher number of sales at lower prices so as to get a maximum exposure for the product.
Answer:
Reward to volatility ratio = 0.71
Explanation:
Given the expected risk premium = 10%
Standard deviation = 14%
The rate on treasury bills = 6%
The investment amount that the client chooses to invest = $60000
Expected return of equity = the expected risk premium + The rate on treasury bills
Expected return of equity = 10% + 6% = 16%
Standard deviatin = 14%
Reward to volatility ratio = (expected return - risk free rate) /standard deviation
Reward to voltality ratio = (16% -6%)/14%
Reward to voltality ratio = 0.71
