An increase in the interest rate will causeAan increase in planned investment and an increase in the equilibrium GDPBa decrease in planned investment and a decrease in the equilibrium GDPCan increase in planned investment and a decrease in the equilibrium GDPD.a decrease in planned investment and an increase in the equilibrium GDP

Interest Rate: An interest rate is the amount of money that a lender charges a borrower in exchange…

Answered: An increase in the interest rate will…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14MC: This calculation determines profitability or growth potential of an investment, expressed as a...

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Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. Work out the Covariance with mp showing detatiled working and explanation % Return on T-Bills, Stocks and Market Index States of Economy Probability T-Bills Phillips Pay-up Rubber-Made Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean 7 16.9 20.7 19.6 15 Variance (%) ^2 0 549.09 244.124 358.04 313.6 Standard Deviation 0 23.4326695 15.6244712 18.92194493 17.7087549 Coefficient of Variation 0 1.386548491 7.54805372 0.965405354 1.18058366 Covariance wit MP Correlation with Market Index…
Question: What does ROI stand for in finance? a) Return on Investmentb) Risk of Inflationc) Revenue over Incomed) Rate of Interest
Which of the following segment performance measures will decrease if there is an increase in the interest expense for that segment? Return on Investment Residual Income A) Yes Yes B) No Yes C) Yes No D) No No
When a lump sum investment shows growth, even if the interest rate stays low, it is known as.. 1- discount rate 2-opportunity cost 3-return on investement 4-compounding growth
If short - term rate - sensitivity asset - liability GAP is negative : a)Decrease in Interest Rate will result in increase in Net Interest Income b)Decrease in Interest Rate will result in decrease in Net Interest Income c)Profit will increase notwithstanding the movement in interest rate d)Profit will increase notwithstanding the movement in interest rate
Why are they important for policymakers and investors, also in what situations and why do they use them? Gross Domestic Product (GDP): Balance of Payments (BoP): Inflation: Real return & Nominal Return:
A country’s current account position moves from a surplus to a deficit. What will be the result? Pick a,b,c, or d A) an increase in real GDP B) a decrease in unemployment C) an increase in the exchange rate D) a decrease in the money supply
Which of the following performance measures will decrease if the minimum required rate of return increases? return on investment residual income A yes yes B no yes C yes no D no no
This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero A. internal race of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method
Define the term capital intensity. Explain how a decline in capital intensity would affect the AFN, other things held constant. Would economies of scale combined with rapid growth affect capital intensity, other things held constant? Also, explain how changes in each of the following would affect AFN, holding other things constant: the growth rate, the amount of accounts payable, the profit margin, and the payout ratio.
Subsidy on inputs (A) increase inflation(B) decrease inflation(C) does not directly affect economic growth or cannot be determined
Suppose interest rates in the economy increase. How would such a change affect the costs of both debt and common equity based on the CAPM?

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