The price of a consol that paying $85 annually is $1,416.67 when the interest rate is 6 percent. If the interest rate fall by 1 percent, the price of the consol is Select one: a. $1,700. b. $700. c. $1,400. d. $1,000.
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- When the interest rate falls, how does the opportunity cost of holding money and the quantity of money demanded change? Nominal interest rate (percent per year) 8 7- 1 Draw an arrow on the MD curve to show the effect of a rise in the intérest rate above 5 percent a year. Label it 1. 5- Draw an arrow on the MD curve to show the effect of a fall in the interest rate below 5 percent a year. Label it 2. 4- 3- When the interest rate falls, other things remaining the same, the opportunity cost of holding money and MD the O A. falls; quantity of money demanded increases B. rises; quantity of money demanded decreases 3.0 C. falls; demand for money increases 2.6 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.4 Quantity of money (trillions of dollars) OD. rises; demand for money decreases 70°F Sunny3. A coin collector has a set of coins that are worth $500 now. The coin collector wants to determine the optimal time to sell these coins. The value of the coins at time t is V(t) = 500e0.8t 0.3 If the interest rate is 4 percent, what is the optimal time to sell the set of coins?1. You are given the following sample annual data about the prices of Alibaba and Google stocks: a. b. C. Time End-2018 End-2019 End-2020 End-2021 End-2022 ( stocks. stocks. Alibaba Stocks $148.50 $157.34 $165.75 $177.00 $190.24 Google Stocks $1,564.23 $1,723.26 $1,700.54 $1,894,23 $1,900.23 Determine the sample covariance of the returns of Alibaba and Google stocks. Compute for the sample standard deviation of the returns of Alibaba and Google ) Determine the sample correlation between the returns of Alibaba and Google
- Suppose that the interest rate is 5 percent. Enter your answers rounded to 2 decimal places. A. What is the future value of $100 four years from now? $ How much of the future value is total interest? $ b. By how much would total interest be greater at an interest rate of 7 percent than at an interest rate of 5 percent? $..relationship between bond price and interest rate. Explain it comprehensively and discuss in detail with real life examples. 1) There are 2) Discuss the concept of capital in terms of finance comprehensively and the ways it is raised in details. 3) Discuss the concept of capital market in detail focusing on how it functions in the financial market and how it satisfies suppliers (investors/savers) and demanders (companies/firms) by giving real life examples. 4) "The secondary market directly promotes capital formation." Do you agree with this statement? Why? Discuss in detail.A firm's current profits are $900,000. These profits are expected to grow indefinitely at a constant annual rate of 2 percent. If the firm's opportunity cost of funds is 4 percent, determine the value of the firm:Instructions: Enter your responses rounded to one decimal place.a. The instant before it pays out current profits as dividends. b. The instant after it pays out current profits as dividends.
- Investments a. are more profitable when economic rents rise. b. are more profitable when interest rates rise. c. are less profitable when interest rates rise. d. are less profitable when economic rents rise.2. The opportunity cost of holding assets as money Suppose you've just inherited $10,000 from a relative. You're trying to decide whether to put the $10,000 in a non-interest-bearing account so that you can use it whenever you want (that is, hold it as money) or to use it to buy Government of Canada securities. The opportunity cost of holding the inheritance as money depends on the interest rate on the bond. For each of the interest rates in the following table, compute the opportunity cost of holding the $10,000 as money. Interest Rate on Government Securities Opportunity Cost (Dollars per year) (Percent) 8 10 What does the previous analysis suggest about the market for money? the interest rate rises. The quantity of money demanded increases O The supply of money is independent of the interest rate.. O The quantity of money demanded decreases as the interest rate rises.3.18 BOP Transactions. Identify the correct BOP ac-count for each of the following transactions: a.A German-based pension fund buys U.S. govern-ment 30-year bonds for its investment portfolio. b. Scandinavian Airlines System (SAS) buys jet fuel at Newark Airport for its flight to Copenhagen. c. Hong Kong students pay tuition to the University of California, Berkeley. d. The U.S. Air Force buys food in South Korea to supply its air crews. e. A Japanese auto company pays the salaries of its executives working for its U.S. subsidiaries. f. A U.S. tourist pays for a restaurant meal in Bangkok. g. A Colombian citizen smuggles cocaine into the United States, receives cash, and smuggles the dollars back into Colombia. h. A U.K. corporation purchases a euro-denomi-nated bond from an Italian MNE
- 1. A security promises a future cash flow of exactly $4,200 in 5 years and $1,001 in 6 years. If the interest rate is 5%, then what is the present value of this security? 2.There are decreasing opportunities for businesses to make profitable investments. In the market for bonds we expect that the equilibrium price will and the equilibrium interest rate will17. When the interest rate in an economy rises, the stock market typically reacts negatively. This is because (a) the future dividends companies provide to their investors are discounted more heav- ily. (b) the present values of the future dividends companies provide to their investors decrease. (e) investors sell their investments in the stock market and deposit the money into banks. (d) All of the above are correct. 18. Suppose that the interest rate is 8%. The sum of the present values of three payments of $500 to be received in 3 consecutive years is calculated as (a) 8500 x 1.08 x 3 (b) S00 (1.08) (1.08 1O8 (c) 8500 x 1.08 + 8500 x (1.08)2 + 8500 x (1.08)3 (d) x 3 1O8 19. When a person buys insurance, which of the following best describes the economic transaction? (a) The person donates money to the insurance company. (b) The insurance company pays the person to buy the risk, a desirable commodity, from him/her. (c) The person pays to sell the risk, an undesirable commodity, to…Which of the following is a true statement? a. In a bubble, the price of the asset is the expected present value of its future returns. b. The overall real value of the stock market may fluctuate significantly over a year. c. The higher the one-year interest rate, the higher the present discounted value of a payment next year. d. The yield curve normally slopes down.