Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Detailed answerarrow_forwardimpacts of inflation on money investmentarrow_forwardOften, more than one kind of shock hits the economy at once. When this happens, the different shocks could push the price level in different directions in the short run, leaving the final short-term result ambiguous. What is most likely to happen the price level and real GDP (i.e., output) in the following cases? Will they rise, or fall, or can’t you tell with information given? Note that you will not always be able to know the answer for one, but not the other. Motivate your answer. A nation’s scientists invent many new internet search tools, raising current productivity and making investors optimistic about future inventions as well. A government raises taxes, and its economy experiences a year of excellent weather for growing crops. Oil prices skyrocket and the central banks slows the rate of money growth.arrow_forward
- Benefit cost analysis may be conducted with real or nominal dollars and real or nominal discount rates. Which statement about real vs. nominal dollars and discount rates is most accurate? O Using real dollars and a real discount rate will yield the same result as using nominal dollars and a nominal discount rate. O When using real dollars, the analyst should use the nominal discount rate to adjust for inflation. O When using nominal dollars, the analyst can use either a real or nominal discount rate. It does not matter. O Nominal discount rates do not include a risk factor. If risk is a significant element, then the analyst should use a real discount rate.arrow_forwardA fall in interest rates tends to push stock prices O and real estate prices up. and real estate prices down. O up and real estate prices down. down and real estate prices up.arrow_forwardRequired: d) True or False: When the peg is credible, recession will have a smaller adverse impact on the economy.arrow_forward
- Can real interest rates be negative ? Give a simple examplearrow_forwardsimple payback period will be less than the payback period considering compounded interest rate (for the same amount and same period): True or Falsearrow_forwardWhen estimating cost of debt, the firm should not simply use current short-term rates because these rates do not reflect expectations regarding Group of answer choices long-term inflation expansionary monetary policy contractionary monetary policy short-term inflationarrow_forward
- In general, what effect would a reduction in risk have on “going-in” cap rates? What would this effect be if it occurred at the same time as an unexpected increase in demand? What would the effect on property values be?arrow_forwardHow might a sudden decrease in people's expectations of future real estate prices affect interest rates? O A. Interest rates would increase because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase. B. Interest rates would increase because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. OC. Interest rates would decrease because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. O D. Interest rates would decrease because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase.arrow_forwardWhat will happen to the present value if the growth rate exceeds the discount rate? the present value will be infinite the present value will be zero the present value will be unknown No answer text provided.arrow_forward
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