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- Analyze the effect of the Baby Boomers retirement on the supply and demand for financial capital: Show graphically the initial and final equilibrium.Explain why you agree or disagree with the following statements:A. “A bond issued by a corporation of the highest credit rating can qualify as a risk-free asset.”B. “A five-year U.S. Treasury note would qualify as a risk-free asset because of its guarantee by the U.S. government.”What do you understand by the term "Risk Free Interest Rate"? How do you rationalize this concept with phenomena characterized by the Government of Barbados’ debt restructuring in 2019?
- Suppose that a firm begins at time t=1 with a capital stock of K(1)= 200,000 and, in addition to replacing any depreciated capital, is planning to invest in new capital at the rate I(t)=50,000t*-3/2 for the forseeable future. Find the planned level of capital stock T years from now. Will this firm’s capital stock grow without bound as T -> ∞ ? Explain using a graph.What is a financial bubble in the context of asset markets? A. A situation where asset prices are stable and reflect intrinsic value B. A sudden and unsustainable increase in asset prices followed by a crash C. A government policy to regulate asset markets D. A situation where asset prices are controlled by a single entityPredict what will happen to stock prices after amonetary easing. Explain your prediction
- The demand curve and supply curve for one‐year discount bonds with a face value of R1,000 are represented by the following equations (round your responses‐quantity and price to the nearest whole number and the interest rate to two decimal places where applicable). Bd: P = −0.6 * Q + 1200 Bs: P = Q + 800 Where Bd, Bs , P and Q are bond demand, bond supply, price and quantity respectively. Calculate the expected equilibrium price and quantity of bonds in this market and what is the expected interest rate in this market?Which of the below statements is false for frictionless financial markets? A.No transactions costs B.No corporate and personal taxes C.No agency costs between shareholders and debtholders D.Information asymmetry between managers and investorsAnswer the question based on the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent. If the price of this bond increases to $1,250, the interest rate will Multiple Choice rise to 12.5 percent. fall to 2.5 percent. fall to 8 percent. rise to 18 percent. fall to 1.25 percent.
- Which of the following statements is correct regarding bonds? A. An increase in market interest rate would reduce a bond's yield. B. Bonds with high yields reflect high risk instruments. C. The equilibrium market price of a bond is always greater than the present value of that bond. D. A decrease in the market interest rate would result in a decrease in the present value of the bond. dont use chatgpt answer17. Which of the following is not connected with the Stock market Crash? A. SpeculationB. Buying on margin C. Tax CreditD. PanicIf you suspect that a company will go bankrupt nextyear, which would you rather hold, bonds issued bythe company or equities issued by the company? Why?