midterm practice 10

How would you describe the relationship between a risky investment and the return on that investment (think stocks or retirement accounts)? a casual or limited relationship there is no relationship between the level of risk and the return you get on your investment a direct or positively correlated relationship an inverse or negatively correlated relationship

Many Exchange Traded Funds (ETFs) use indexes as their underlying benchmarks, so it is equally important to  understand the different types of indexes. Your ETF investing strategy depends on them. The three main types  of indexes are price-weighted, value-weighted, and pure unweight. Also the capital market contains different  instruction the investors can use while executing their investment. Discuss the weighting methods used in index construction with their scheme?

Question 6 (i) Write down an equation for the three main components of the nominal long term interest rate on a bond, clearly explaining what each symbol stands for. (ii) Draw a negatively sloped yield curve and label it curve 1. On the same diagram draw a new yield curve labelled curve 2 if the expected rate of inflation both short and long term falls. Label your axes carefully. (iii) Discuss how an increase in inflation uncertainty caused by the Ukraine war can affect the expected rate of inflation and inflation uncertainty and thereby affect UK bonds yields and UK bond prices

In financial economics, __________ is a concept that refers to the reduction in investment risk that can be achieved by combining various financial assets in a portfolio. It is a fundamental element of modern portfolio theory. A) DiversificationB) ArbitrageC) LeverageD) Speculation

All the investment vehicles that you can use in your investment plan are traded in the securities markets in the form of stocks, bonds, and other financial instruments. There are physical places such as the NYSE (New York Stock Exchange) or the electronic networks such as NASDAQ (National Association of Securities Dealers Automated Quotations) where investors trade these securities. Securities markets can be divided into primary and secondary markets. When securities are bought and sold by investors who did not originally purchase the issued security, the transactions take place in the     market.   Within the arena of security trading, the secondary market plays an extremely important role. The secondary market can be divided into the broker market and dealer market. For each of the following statements, indicate by checking the appropriate boxes, whether each statement is true of broker markets, dealer markets, both markets, or neither market.     Broker Dealer…

Use the following graphic to describe the interactions between markets when there is recession caused by a financial crisis and how might the risk premium evolve in such a situation.

Write B1) Do you think capital budgeting is important? Justify? B2) List all the techniques of Capital Budgeting? You think are relevant today? B3) Do you think that these techniques are really helpful to financial managers B4) Do you think that these techniques can be used in situations like COVID-19? B5) According to you which technique is better and why?

Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.   Q2 Briefly describe the difference in the bond market in general and the stock market in the context of investment and return. Why is corporate bond investment usually riskier than investing in US Treasury securities? Q3. Estimate the rate of return (yield to maturity) if you as an investor purchase a one-year US TN at the market price of $955 with an FV of $1,000. Make sure you show the numerical estimation by using the yield equation. Q4. Draw a hypothetical demand and supply curve for S&P 500 stocks and briefly explain the effects of unexpected increase in inflation rate caused by a sudden rise in energy prices. Q5. Draw a demand and supply curve of the loanable funds market and explain the effects on equilibrium prices and quantities of loanable funds in response to the situation described in Q4. Q6. Suppose the increase in…

Problem 17-03 (algo) Suppose that a risk-free investment will make three future payments of $500 in 1 year, $500 in 2 years, and $500 in 3 years.   Instructions: Round your answers to 2 decimal places.   a. If the Federal Reserve has set the risk-free interest rate at 16 percent, what is the proper current price of this investment?        $   b. What is the price of this investment if the Federal Reserve raises the risk-free interest rate to 18 percent?        $

Q4

Based on the Research Question and Research Objective provided, write a section for significance and justification. Significance means why the topic matters in the global (SDG 9.3) and local context  (Malaysia) and what potential contributions can be made. Justification should be about why it is important and covering the research gap.

Select all of the following that are true regarding hedging: A. Hedging is risk mitigation through diversification.  B. Hedging is the same as arbitirage since it acts in across markets C. Hedging increases the returns of an investment D. Buying an risky investment is an example of hedging Detailedly Explanation Please, Thank you!

Questions:   Compute the expected intrinsic price of each stock in year 5. Assume that All stocks are fairly priced such that the intrinsic and market values are equal. Dividends are paid at the beginning of the year   How many units of each stock will Stephanie buy? Support your response with relevant computations. What will be the total investment cost for shares? Show appropriate calculations.   Which bonds are acceptable for investment? Justify your response with suitable computations.   What will be the total cost of investment in bonds?                             Do the stock and bond investments fall within Stephanie’s investment guidelines? Show appropriate computations in support of your response.   Will Stephanie have enough funds for her investment in stocks and bonds, when needed? What will be the surplus / shortfall, if any? Given that Stephanie’s bank offers an interest rate of 6% per year, what additional amount should she have deposited as a fixed…

a) Expectation of return from investment has two things, one is 'Liquidity preference' and 'Abnormal Return'. Which one do you prefer? Explain why. b) As a rational investor in which process would you like to utilize for your investment decision?

a) Explain the reason(s) why bond ratings and interest rate spreads on bonds differ. Which measure is considered by many investors to be a more comprehensive measure of risk? Why?

Assume that the economy can experience high growth, normal growth, or recession. Under these conditions, you expect the following stock market returns for the coming year: State of the Economy High Growth Normal Growth Recession Probability 0.2 0.7 0.1 a. Compute the expected value of a $1,000 investment over the coming year. If you invest $1,000 today, how much money do you expect to have next year? What is the percentage expected rate of return? Return 45% 20% - 4% Instructions: Enter dollar values rounded to the nearest whole dollar and percentages rounded to one decimal place. The expected value is $ and the expected rate of return is b. Compute the standard deviation of the percentage return over the coming year. Standard deviation = = % % %. c. If the risk-free return is 7 percent, what is the risk premium for a stock market investment? Risk premium

Please provide detailed explanation and calculation

1. During the second quarter of 2010 rumors about the health of the Greek economy created significant fluctuations in stock prices all over the world. Explain the effects of changes in stock prices on investment levels according to Tobin’s q theory. 2. A relatively recent trend in most developed countries, including the United States, is the creation of single person households. Discuss the short- and long-run consequences of this trend in housing prices and residential investment.  

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate and show your calculations. Unsupported answers will receive no marks. It is the explanation that is important.   A1-1. On Feb 1, 2022, the yield (nominal interest rate) on the Canadian government-issued 10-year bond was 1.77% (that part is true). Given that yield, it is impossible for the real interest rate on this bond to be negative.