Through the expectations hypothesis and the liquidity preference theory of the term structure of interest rates, liquidity must be zero for the forward rate to be equal to the expectations of future short rates.
<h3 /><h3>What is expectation theory?</h3>
Corresponds to a forecast of short-term interest rates by analyzing them against current long-term interest rates.
Therefore, it is a theory used to assist in better understanding and forecasting short-term securities trading in the future.
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Answer:
C) more than 5Y
Explanation:
the opportunity cost of producing 101 units of X = 5 units of Y
if the opportunity costs increase as the number of units produced increases, then the opportunity cost of producing 201 units of X will be more than 5 unit of Y. This is simply because 5 units of Y was the opportunity cost of producing 101 units of X and the opportunity costs are increased.
Answer:
NPV of the annuity = $209,782.38
Explanation:
Note: See the attached file to see how the Present Values (PV) and the Net Present Value (NPV) are calculated.
The following explanation should be read with the attached.
i = Monthly interest rate = 3%/12 = 0.25%, or 0.0025
DF = Discounting factor = (1 + i)^n = (1 + 0.0025, where n denotes relevant month
Number of months = 30 years * 12 months = 360 months
CF = Cash Flow = P + 5, where P denotes previous payment
Answer:
Yes, it is very much true that making decisions often involve both financial and non-financial factors. There are some situations in life where we have to consider both of them in order to make a valid or correct decision. For example, when we are buying a laptop, we will definitely consider its price and other specifications like, hard drive space, ram, but we will also consider its style, design and color as well not only price. In another case, when we have to choose between three jobs. One job offers $10000 per month in New York city, while other is offering $15000 in London and third one in China offering $18000. I love to live in New York city which is quite near to my hometown as well but it is offering me the less salary as compared to the other 2 options, I have to do a trade-off here. I will go for opting New York's job in $10000, I will not considering money factor here because I will be more comfortable in this city as many of my family members and friends live here, hence, sometimes both financial and non-financial factors matter when we have to make a decision.
