Q: Why are financial markets essential for a healthy economy and economic growth?
A: Financial market: For the most part, allude to any commercial center where securities exchanging…
Q: why should investors consider constructing global portfolios? As part of your response, be sure to…
A: Global portfolios are all such portfolios which will be providing investors with an opportunity to…
Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…
A: This question explains about the present value of benefits surpasses and the cost of an investment…
Q: Which of the following is a determinant of exchange rates? a. A change in consumer preferences b. A…
A: Exchange rates are rates at which the currency of one coutnry is converted to other country's…
Q: risk-taker (likes to take risks) type of investor prefer equities over fixed income?
A: Most of investors invest in the equity and like to take high risk and would invest in stock market.
Q: When the real rate of interest is less than the nominal rate of interest, then: Multiple Cholce…
A: The formula for nominal rate is as follows: Nominal rate=Real interest rate +Inflation rate
Q: 2. What happens to domestic investment as the real interest rate rises? Explain your answer
A: The Federal Reserve (the Fed) has three goals: maximizing employment, maintaining price stability,…
Q: How can herding behavior and behavioral financecontribute to market bubbles?
A: Herding behavior indicates how investors tend the actions of a larger number of investors group,…
Q: We think of banks as being interest rate intermediaries. That is, the borrow cheaply, and then lend…
A: Following are the types of risk faces by banking industry other than interest rate:
Q: The main ideas of Keynesian economics are the importance of the long run over the short run and an…
A: Journal entries are the building blocks of accounting, which is the act of recording the economic…
Q: Do you think that we should try to control inflation or that we should let the market take care of…
A: Definition: Inflation is a general increase in the price of goods and services over some period of…
Q: Suppose investors expect interest rates to increase substantially in the future. Currently, should…
A: Investments are the means of parking and investing money and funds in various financial instruments…
Q: Why are they important for policymakers and investors, also in what situations and why do they use…
A: GDP Gross domestic product (GDP) is the measure of total value of goods and services produced within…
Q: If you believe the U.S. dollar will depreciate more dramatically than other investors anticipate,…
A: Understanding the concept of dollar depreciating: For instance, Current exchange rate of dollar and…
Q: After the global financial crisis, are investors operating in the securities markets more cautious…
A: Securities market is a component of the wider financial market where securities can be bought and…
Q: How can we use the market interest rate to find the net present worth?
A: Investors often find the present worth of the fund flows because investors receive the funds at…
Q: Why using OIS rates instead of LIBOR rates during the 2008 crisis would be more efficient and…
A: Using of OIS rate is considered as more efficient as compared to LIBOR rates during the crises of…
Q: critically discuss the rationale behind the introduction of negative interest rate policies (NIRPs)…
A: Negative interest rate policy (NIRP) is an a monetary policy tool employed by a central bank.Under…
Q: What are two monetary policies that could be implemented by the central bank which would have the…
A: Federal bank achieve of economic growth by monetary policy by increasing or decreasing money supply.
Q: Why are efficient capital markets necessary for economic growth?
A: Capital Markets are the markets that accelerate the transactions of securities with specified term…
Q: Why is the t-bill's return independent of the state of the economy? Do t-bills promise a completely…
A: Treasury bills (T-bills) are a kind of short-term debt that is issued by the government with the aim…
Q: ow do you think today's low interest rate environment is impacting the time value of money? How…
A: Time Value of Money: It refers to the concept which tells the value of money is worth more than in…
Q: steps that you would take to mitigate the risk of interest rate risk
A: The important steps in mitigating interest rate risks are as follows: Diversification: One of the…
Q: Why is the T-bill’s return independent of the state of the economy? Do T-bills promise a completely…
A: Government also issues various securities in the market to arrange the funds and generally, these…
Q: Discuss the factors that influence interest rates, and why interest rates are so critical to…
A: The interest rates in an economy refer to the rate that is charged by the lender while lending the…
Q: How does climate change threaten financial stability?
A: Climate change is threatening financial stability at a rapid speed and in a highly tangible and…
Q: How can a federal budget deficit increase market equilibrium interest rates and reduce private…
A: The federal budget is the budget prepared by the government for the purpose of considering the…
Q: How can the bursting of an asset-price bubble in thestock market help trigger a financial crisis?
A: Financial crisis refers to a situation when no one in the financial market is interested to lend…
Q: Why would you expect securitization to take place only in highly developed capital markets?
A: Firstly, we understand what is securitization, In simple word it is a process of liquidation of…
Q: Explain on the effects of rising inflation rates on the economy. How can the rising inflation rate…
A: By boosting the prices of the products inflation generally reduces your purchasing power. Inflation…
Q: Would you prefer more frequent compounding for your investments? Why or why not?
A: Compounding: In investment accounting, compounding refers to the method through which interest is…
Q: When market rates of interest rise after a fixed-rate security is purchased, the value of the…
A:
Q: What risk is due to changes in the level of interest rate in the economy and may affect industries…
A: Change in level of interest rate in the economy affects industries at the same time and is a major…
Q: What are the major economic functions of the interest rate? How might the fact that many businesses…
A: Interest is the price paid by the borrower for using the money borrowed from the lender.
Q: Why do Eurobonds appeal to investors?
A: Euro bonds are the bonds that are issued in the Euro market. It comprises the bonds that are issued…
Do you think some investors may take advantage of the interest rate reduction, despite economic uncertainties?
Investors deals in various investment options like derivatives instruments that require margin money to invest. Investors can put money into options and can have benefit from it. Although if the economic uncertainties prevail, investors can imply some safe option strategies i.e. buying call options as well as put options at the same time such that nominal profit is generated.
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Solved in 2 steps
- Is it correct to state that banks’ returns will be higher if interest rates increase? Outline the advantages and drawbacks of Gap analysis and Duration analysis.If interest rates in the economy are high, then a firm would use a MARR higher than current interest rates, and if interest rates are low, The MARR may be lower TRUE OR FALSE With explanationSuppose interest rates in the economy increase. How would such a change affect the costs of both debt and common equity based on the CAPM?
- Discuss the factors that influence interest rates, and why interest rates are so critical to economic growth or retraction.Why is the T-bill’s return independent of the state of the economy? Do T-bills promise a completely risk-free return? Explain?2. What happens to domestic investment as the real interest rate rises? Explain your answer
- What is meant by the real risk-free rate of interest? Seleccione una: a. The nominal risk-free interest rate, less the expected inflation. b. The rate actually used in the market, not in textbooks. c. The rate quoted on short-term Treasury bills. d. The opportunity cost of foregoing consumption, representing the rate that must be offered to individuals to persuade them to save rather than consume.As an investor now or in the future, what are steps that you would take to mitigate the risk of interest rate risk? Do you believe age and current economic status play a role in how much interest rate risk investors can tolerate?The central bank takes action that lowers interest rates dramatically. what is the effect of it to firm value? increase or decrease and why.
- Explain the challenges policymakers face when interest rates are very low.How is the market interest rate in the short-term and long-term financial market affected under the Pure Expectations theory when suppliers and users of loanable funds expect that interest rates will decrease the next year?What risk is due to changes in the level of interest rate in the economy and may affect industries at the same time? a.systematic risk b. inflation rate risk c.foreign exchange rate risk d.interest rate risk