Homework Answers
53)
Correct Answer is Option B - Interest Rate
Future Cash Flows have to be discounted using "Cost of Capital" which is effectively the interest rate for the company.
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tax revenues are greater than its expenditures savings rate is higher than its borrowing rate purchase...
3.2% 2.5% 0/1 pt Question 32 Assume that the current interest rate on a one-year bond...
3.2% 2.5% 0/1 pt Question 32 Assume that the current interest rate on a one-year bond is 8 percent, the current rate on a two-year bond is 10 percent, and the current rate on a three-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the one-year interest rate expected during Year 3? (Base your answer on an arithmetic average rather than a geometri average.) 12% 16% 13% Incorrect. The yield on any...
revellus the government's expenses are greater than its Correct. A federal deficit occurs when a government's...
revellus the government's expenses are greater than its Correct. A federal deficit occurs when a government's expenses are more than its tax revenues. The government tries to control its deficit either by borrowing or by printing money. See 5-4: Other Factors That Influence Interest Rate Levels the money supply in the market decreases 0/1 pts Incorrect Question 45 Which of the following is true of federal deficit? Other things held constant, the larger the federal deficit, the lower the level...
5. Automatic adjustments to the government budget The following table provides some information on government expenditures (G) and tax revenues (T) at different levels of real GDP in a hypothetic...
5. Automatic adjustments to the government budget The following table provides some information on government expenditures (G) and tax revenues (T) at different levels of real GDP in a hypothetical economy. Throughout this problem you should assume that government transfers (TR) are zero. Real GDP (Billions of dollars) 460 Government Expenditures (G) (Billions of dollars) 72 72 72 Tax Revenues (T) (Billions of dollars) 70 72 74 540 Use the blue line (circle symbols) to plot the government expenditures schedule...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
Agritaban p us equity o 10 A Bank Make Money ily CAJ Pying higher interest rates...
Agritaban p us equity o 10 A Bank Make Money ily CAJ Pying higher interest rates on e s than we eamed on its assets Paying lower interest rates on its Babies than are eamed on i t s i) Making risky loans Dj Maintaining a high degree of liquidity 11. The Quantity Theory of Money (A) is based on the following equation: MVPO (Assumes that increases in money supply are deflationary (C) Assumes that the Velocity of Money is...
11) Which of the following typically has the lowest yield? A) 5-year AAA corporate bond B)...
11) Which of the following typically has the lowest yield? A) 5-year AAA corporate bond B) 2-year U.S. Treasury note C) Fed Funds D) 3-month U.S. Treasury bill 12) Debt instruments are also called: A) adjustable notes B) credit instruments C) perpetual securities D) interest rate swaps 13) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield B) Coupon rate C) Maturity D) Par amount 14) If you purchased a U.S. Treasury at a...
Based on the below excerpt from an Economics textbook, please answer the question below the text:...
Based on the below excerpt from an Economics textbook, please answer the question below the text: Over the years, the federal government budget experiences imbalances. A budget deficit occurs when federal expenditures (including both spending on final goods and transfer payments such as social security benefits, welfare, unemployment benefits etc.) exceed tax revenues collected by the federal government for that fiscal (budget) year. A surplus occurs when the government collects more in taxes than it spends. For example, for four...
8. Risks of investing in bonds The higher the risk of a security, the higher its...
8. Risks of investing in bonds The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the selection dropdown lists to correctly associate each curve with its corresponding...
A tax-exempt security's rate is determined by mathematically setting its after-tax rate equal with that of...
A tax-exempt security's rate is determined by mathematically setting its after-tax rate equal with that of a taxable security (TS). The tax paid on a taxable security is the marginal tax rate (MTR). Elki would like to invest $38,000 in tax-exempt securities. He now has the money invested in a certificate of deposit that pays 6.10% annually. What rate of interest would the tax-exempt security have to pay to result in a greater return on Elki's investment than the certificate...
A tax-exempt security's rate is determined by mathematically setting its after-tax rate equal with that of...
A tax-exempt security's rate is determined by mathematically setting its after-tax rate equal with that of a taxable security (TS). The tax paid on a taxable security is the marginal tax rate (MTR). Elki would like to invest $54,000 in tax-exempt securities. He now has the money invested in a certificate of deposit that pays 5.30% annually. What rate of interest would the tax-exempt security have to pay to result in a greater return on Elki's investment than the certificate...
3.2% 2.5% 0/1 pt Question 32 Assume that the current interest rate on a one-year bond is 8 percent, the current rate on a two-year bond is 10 percent, and the current rate on a three-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the one-year interest rate expected during Year 3? (Base your answer on an arithmetic average rather than a geometri average.) 12% 16% 13% Incorrect. The yield on any...
revellus the government's expenses are greater than its Correct. A federal deficit occurs when a government's expenses are more than its tax revenues. The government tries to control its deficit either by borrowing or by printing money. See 5-4: Other Factors That Influence Interest Rate Levels the money supply in the market decreases 0/1 pts Incorrect Question 45 Which of the following is true of federal deficit? Other things held constant, the larger the federal deficit, the lower the level...
5. Automatic adjustments to the government budget The following table provides some information on government expenditures (G) and tax revenues (T) at different levels of real GDP in a hypothetical economy. Throughout this problem you should assume that government transfers (TR) are zero. Real GDP (Billions of dollars) 460 Government Expenditures (G) (Billions of dollars) 72 72 72 Tax Revenues (T) (Billions of dollars) 70 72 74 540 Use the blue line (circle symbols) to plot the government expenditures schedule...
Agritaban p us equity o 10 A Bank Make Money ily CAJ Pying higher interest rates on e s than we eamed on its assets Paying lower interest rates on its Babies than are eamed on i t s i) Making risky loans Dj Maintaining a high degree of liquidity 11. The Quantity Theory of Money (A) is based on the following equation: MVPO (Assumes that increases in money supply are deflationary (C) Assumes that the Velocity of Money is...
11) Which of the following typically has the lowest yield? A) 5-year AAA corporate bond B) 2-year U.S. Treasury note C) Fed Funds D) 3-month U.S. Treasury bill 12) Debt instruments are also called: A) adjustable notes B) credit instruments C) perpetual securities D) interest rate swaps 13) Which of the following characteristic is NOT fixed on a coupon bond? A) Current yield B) Coupon rate C) Maturity D) Par amount 14) If you purchased a U.S. Treasury at a...
Based on the below excerpt from an Economics textbook, please answer the question below the text: Over the years, the federal government budget experiences imbalances. A budget deficit occurs when federal expenditures (including both spending on final goods and transfer payments such as social security benefits, welfare, unemployment benefits etc.) exceed tax revenues collected by the federal government for that fiscal (budget) year. A surplus occurs when the government collects more in taxes than it spends. For example, for four...
8. Risks of investing in bonds The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the selection dropdown lists to correctly associate each curve with its corresponding...
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