Why is the t-bill's return independent of the state of the economy? Do t-bills promise a completely risk-free return?

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: 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: Explain clearly what should happen to a security’s nominal interest rate as the security’s liquidity…

A: A yield curve is a graph that compares the yields (interest rates) of bonds with similar credit…

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: Under the expectations hypothesis, if the yield curve is upward-sloping, the market must expect an…

A: Under the expectations hypothesis, if the yield curve is upward-sloping, the market must expect an…

Q: Is the statement that a pproject that is unacceptable today might be acceptable tommorrow given a…

A: Yes , the statement is correct. Any changes related to market returns affects project of a company.…

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: What is financial market equilibrium? And then explain its relation to required rate of return.

A: Financial market equilibrium: Financial market equilibrium is a condition in which money supply…

Q: is it possible for future prices to become negetive without violating the principle of no-arbitrage.…

A: Future prices refer to the price that two companies have agreed to pay or receive on a future day of…

Q: Why is it true that a reinvestment rate is implicitly assumed whenever we find thepresent value of a…

A: Discounting is the method of assessing the real value of a potential transaction or collection of…

Q: The main ideas of Keynesian economics are: a-the importance of the long run over the short run, and…

A: Journal entries are the building blocks of accounting, which is the act of recording the economic…

Q: If we are speaking about the CAPM model and undiversifiable risks.    Then what is meant by…

A: CAPM model The Capital asset pricing model (CAPM) refers to an idea that describes the systematic…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

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: If interest rates in the economy are high, then a firm would use a MARR higher than current interest…

A: MARR : Minimum acceptable rate of return is the return which the investors need from the project to…

Q: Let rf be the risk free rate of interest. E[r e ] be the expected return of some risky asset.…

A: CAPM: CAPM is also called as Capital assets pricing model. Factors affecting CAPM return are risk…

Q: o you think a person would opt to use the Payback Period Method instead of the Net Present Value or…

A: Given information : . NPV refers to the difference between the sum of the present value of expected…

Q: Which of the following is consistent with a steeply upwardly sloping yield curve?a. Monetary policy…

A: Monetary policy: The monetary policies are utilized by government to go-slow economic growth by…

Q: Is yield to maturity a valuable factor to take into account? Won't knowing the coupon rate be…

A: Yield to maturity is referred to as the total return that are anticipated on bond when the bond is…

Q: Suppose interest rates in the economy increase. How would such a change affect the costs of both…

A: In Finance, the Capital Asset Pricing Model is a model used to determine a theoretically appropriate…

Q: If the efficient market hypothesis is true, what are the implications for the investors?

A: Efficient market hypothesis: Efficient market hypothesis assumes states that stocks are traded at a…

Q: The real rate of return is related to O The risk-free rate The risk-free and the inflation rate The…

A: Real rate of returnAn annual profit percentage that is earned on the investment, being adjusted for…

Q: What is the expected return of a zero-beta security?a. Market rate of return.b. Zero rate of…

A: Expected return: Expected returns are proceeds or losses that a depositor anticipates to attain…

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: INTEREST RATE RISK  In the context of the repricing gap model, what is the spread effect? How does…

A: The repricing gap model is based on the consideration that a bank's exposure to interest rate risk…

Q: Is it true that the the wider the risk premium, the lower the price of a expected future cash flow?

A: Risk premium is the return the stock gives over the risk free asset. risk premium = Rs-Rf Wider risk…

Q: In general, what effect would a reduction in risk have on “going-in” cap rates? What would this…

A: Capitalization rate is the projected rate of return percentage that a property will make on the…

Q: What are the Momentum and Reversal Effects? How does the weak form of the ficient market hypothesis…

A: Momentum and reversal effects are very useful in the technical analysis in stock market prediction…

Q: what is the nominal risk-free rate

A: T-bills also known as treasury bills. T- bills are government bonds or debt securities which are…

Q: Does a risky investment always equal a big payoff and vice versa?

A: Risky investments are played by risky people only. Lets take an example for better understanding. Mr…

Q: The expected return on a riskless asset is greater than zero due to? A. an expected return for taxes…

A: Expected rate of return is the profit or loss on the investor that is assumed to be anticipated by…

Q: When does the present economy studies do or use? a. When interest rate is not given b. When time…

A: Economy studies is defined as the study, which used to provide the framework as well as the ten most…

Q: Which of the following statements correctly describe how the present value of a future expected cash…

A: The present value of future cash flows is the value which is derived by discounting the future cash…

Q: If a financial asset has an expected return that is greater than what is necessary to compensate for…

A: If expected return is more than necessary for compensating risk, investors are earning alpha return…

Q: Why do the payback period analysis fail to recognize the difference between the present and future…

A: Pay-Back (PB) Period is time in which Initial outlay related to proposed investment is completely…

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.