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- Consider the money market. What happens and why to interest rates during an economic expansion (e.g., a decrease in Y)? Go through the complete process in detail explaining in words.2. What happens to domestic investment as the real interest rate rises? Explain your answercould you explain computation (1 i )how to find the growth rate and write the formula clearly
- Discuss the factors that influence interest rates, and why interest rates are so critical to economic growth or retraction.Multinational Finance & investment Q2 d) Use a numerical example to illustrate that when there is a large change in the interest rate, the approximation error by using the duration and convexity rule is smaller than the approximation error by using the duration rule only.What is meant by the term “self-supporting growth rate”? How is this raterelated to the AFN equation, and how can that equation be used to calculatethe self-supporting growth rate?
- 15. Explain why net capital outflows and the real interest rate have an inverse relationship. Why do NCOs decrease as interest rates rise? Why do NCOs increase as interest rates fall? Use Graphs!A. What is Engineering Economics? B. Define the following and give 5 examples each 1. Simple Interest 2. Cash Flow Diagram 3. Compound Interest. 4. Effective Rate of Interest 5. Continuous Compound Interest 6. InflationChapter 10 Homework Questions 1. Explain why money has a time value. 2. What is the difference between simple interest and compound interest? 3. Explain the Rule of 72. 4. What is the meaning of present value (PV)? 5. What do we mean by internal rate of return (IRR)