Four fundamental factors affect the cost of money: (1) the return that borrowers expect to earn on their investments, (2) the preference of savers to spend their income in the current period rather than delay their consumption until some future period, (3) the risks associated with the investment, and (4) expected inflation. Consider the following statements that address these factors, and indicate which you think are true.
Statement 1: All things being equal, savers and investors expect to receive some amount of maturity premium as compensation for their deferred consumption.
Statement 2: Historical inflation rates, as opposed to expected future rates of inflation, should be used when calculating an investment’s nominal risk-free rate of return.
Statement 3: An investment that can provide a 10% return should attract more investment capital than an otherwise identical investment that can only provide a 6% return.
Statement 4: The inflation premium used to calculate the nominal interest rate on a five-year security should be equal to the rate of inflation expected in year 5 of the investment.
The true statements are:_______.
a. 1, 2, 3, and 4
b. 2 and 4
c. 1, 2, and 3
d. 1 and 3

Answers

Answer 1

Answer:

The true statements are 1 and 3

Step-by-step explanation:

Statement 1 -

All things being equal ,the savers and investors expect to receive some amount of maturity premium as compensation for their deferred consumption.

Statement 3 -

An investment that can provide a 10% return should attract more investment capital than an otherwise identical investment that can only provide a 6% return.

It is true because the return is higher than the return of identical investment  therefore the higher returns will attract more investment.

Statement 2-

It is a false statement.

Historical inflation rates should not be used when calculating an investment’s nominal risk-free rate of return

But the real risk free rate and  inflation premium is the part of prevailing interest rates that results from lenders compensating for expected inflation should be used

Statement 4-

It is a false statement.

The inflation premium used to calculate the nominal interest rate on a five-year security should not be equal to the rate of inflation expected in year 5 of the investment.

∴ we get

Statement 1 and 3 are true.


Related Questions

Car repairs: Let be the event that a new car requires engine work under warranty and let be the event that the car requires transmission work under warranty. Suppose that ,P(E) = 0.10 , P(T) = 0.02 and P(E,T) = 0.01 .
(a) Find the probability that the car needs work on either the engine, the transmission, or both.
(b) Find the probability that the car needs no work on the engine.

Answers

Answer:

a) 0.11 =  11% probability that the car needs work on either the engine, the transmission, or both.

b) 0.9 = 90% probability that the car needs no work on the engine.

Step-by-step explanation:

P(E) = 0.10 , P(T) = 0.02 and P(E,T) = 0.01 .

This means that:

Only engine: 0.1 - 0.01 = 0.09

Only transmission: 0.02 - 0.01 = 0.01

Both engine and transmission: 0.01

(a) Find the probability that the car needs work on either the engine, the transmission, or both.

0.09 + 0.01 + 0.01 = 0.11

0.11 =  11% probability that the car needs work on either the engine, the transmission, or both.

(b) Find the probability that the car needs no work on the engine.

Probability of needing work on engine:

0.09 + 0.01 = 0.1

Not needing:

1 - 0.1 = 0.9

0.9 = 90% probability that the car needs no work on the engine.

Market researchers selected a random sample of people from region A and a random sample of people from region B. The researchers asked the people in the samples whether they had tried a new product. The difference between the sample proportions (B minus A) of people in the regions who indicated they had tried the new product was 0.15. Under the assumption that all conditions for inference were met, a hypothesis test was conducted with the alternative hypothesis being that the population proportion of B is greater than that of A. The p-value of the test was 0.34.

Which of the following is the correct interpretation of the p -value?
a. If the difference in proportions of people who have tried the new product between the two populations is actually 0.15, the probability of observing that difference is 0.34.
b. If the difference in proportions of people who have tried the new product between the two populations is actually 0.34, the probability of observing that difference is 0.15.
c. If the proportions of all people who have tried the new product is the same for both regions, the probability of observing a difference of at least 0.15 is 0.34.
d. If the proportions of all people who have tried the new product is the same for both regions, the probability of observing a difference of at most 0.15 is 0.34.
e. If the proportions of all people who have tried the new product is the same for both regions, the probability of observing a difference equal to 0.15 is 0.34.

Answers

Answer:

C) If the proportions of all people who have tried the new product is the same for both regions, the probability of observing a difference of at least 0.15 is 0.34.

Step-by-step explanation:

The direction of the test is to the right of 0.15, because the researchers hypothesize that the proportion in region B is greater than the proportion in region A. The p-value is the probability of observing a sample difference of at least 0.15 if the null hypothesis is true.

You can use the fact that the p-value denotes the probability of the area to the right of the test statistic and symmetrically to the left(if the test is two tailed, else its just on the right tail)

The option that is the correct interpretation of the p-value is:

Option c. If the proportions of all people who have tried the new product is the same for both regions, the probability of observing a difference of at least 0.15 is 0.34

What does p value shows in the hypothesis testing?

A p value helps us to decide whether to accept or reject the null hypothesis. If the obtained p value is smaller than the level of significance, then we reject the null hypothesis else we accept it.

The p value shows the area to the right of the test statistic(in the right tail after the plot of test statistic on the x axis)

It shows both right and left tail symmetrically if the test is two tailed.

Since the test statistic is difference between the sample proportions and the alternate hypothesis is testing if the difference is greater than 0.15 or not. Thus, it is single tailed test.

Due to this, the p value is showing if the test statistic is 0.15 or to the right which is higher that 0.15 thus, p value is showing the probability that the test statistic is at least 0.15 is given by 0.34

Thus,

Option c. If the proportions of all people who have tried the new product is the same for both regions, the probability of observing a difference of at least 0.15 is 0.34.

Learn more about p value here:

https://brainly.com/question/16313918

Exit
11-02: Reteaching, Practice, & Digital Quick Check
Which set contains only prime numbers?
A. 1, 3,6
B. 2, 4,7
C. 3, 5, 7
e
D. 4, 8, 10

Answers

C is the answer to your question
the answer is c. 3, 5, 7!

how do i graph y=1/2x+3

Answers

The Y intercept would be 3 and then the rate of change would be 1/2.
First you mark your y-Int (0,3) then from that point go up 1 then 2 to the right and you mark that point and connect the two points with a line in your graph :)

HELP ASAP AGAIN!!
It rained 10% of the 30 days last month. On how many days did it rain.

Answers
3
10
15
27

Answers

Answer:

10 days

Step-by-step explanation:

10 is 10% of 30

Find Linear Functions using Graphs: y = 6x - 4

Answers

Answer:

[tex]x=\frac{y+4}{6}[/tex]

Step-by-step explanation:

y=6x−4

Swap sides so that all variable terms are on the left hand side.

6x−4=y

Add 4 to both sides.

6x=y+4

Divide both sides by 6.

[tex]\frac{6x}{6}=\frac{y+4}{6}[/tex]

Dividing by 6 undoes the multiplication by 6.

[tex]x=\frac{y+4}{6}[/tex]

Divide y+4 by 6.

[tex]x=\frac{y}{6} +\frac{2}{3}[/tex]

ANSWER:

x=1/6y + 2/3

y= 6x - 4

Arrange these in increasing order

Answers

Answer:

so least to greatest? 1/4 1/3 1/2

Answer:

1/4, 1/3, 1/2

Step-by-step explanation:

Please help I don't get this question

Answers

Answer:

10x+30

Step-by-step explanation:

Using distributive property, we have to take the x and 3 out of the parenthesis and simplify the equation.

10(x+3)

We can write this equation out as...

10 · x + 10 · 3

since 10 · x is 10x and 10 · 3 is 30 we can rewrite the simplified version as...

10x+30

Hope this Helps!!! :)

Answer:

A = 10x + 30

10 x X = 10x 10 x 3 = 30 10x + 30


Please help me solve!-

Amy completed a 75-mile
bicycle race in 5 hours. After the race, she realized that the air pressure in her tires was low which slowed her down by an average of 2 miles per hour. She wants to solve the equation to find r, her average speed in miles per hour with properly inflated tires .

5(r - 2) = 75

Answers

R=17

5(17-2)=75

5(15)=75

75=75

I need help with this.​

Answers

Answer:

Hypotenuse equals 6 and Y (longer leg) equals 3 square root of 3

Step-by-step explanation:

According to the 30-60-90 triangle rule, The hypotenuse is always 2 times greater than the shortest leg, and the longer leg is always the square root of 3 tie greater than the shortest leg.

TRY IT Solve and support your thinking
A grasshopper weighs of an ounce. A beetle weighs
of an ounce. Which weighs more?
100
10

Answers

Answer:

45 hihihihihihihihihihihihih

Step-by-step explanation:

Answer:

Your answer doesnt say how much the beetle wighs, probably the grasshopper though

Step-by-step explanation:

When I shoot my shots I make sure they hit.

You’d be lying if you said they don’t no

But when the pandemic began, I stooped so low to post my boring life on brainly

Answers

Honestly felt although I post my life on imvu and stuff like that

Avril cycles 10 km at x km/h and then 14 km at y km/h. Express the time for the journey as a single fraction

Answers

Step-by-step explanation:

It is given that,

Avril cycles 10 km at x km/h and then 14 km at y km/h.

We need to express the time for the journey as a single fraction.

We know that,

Speed = distance/time

or

time = distance/speed

Here, total distance = 10 +14 = 24 km/h

Total speed = x+y

So,

[tex]t=\dfrac{24}{x+y}[/tex]

Hence, this is the required solution.

what is the volume of the retanguler prism shown below

Answers

Answer:

18 3/64

Step-by-step explanation:

Two athletes practice for a marathon by running back and forth on an 11-mile course. They start running simultaneously, one at a speed 2 mph faster than the other's speed. How fast does each run if they meet 1 hour 6 minutes after starting? (The faster runner is already returning at this point.) How far from the starting point do the runners meet?

Answers

Answer:

Faster runner speed: 11 mph

Slower runner speed: 9 mph

Distance from starting point: 9.9 miles

Step-by-step explanation:

Let the slower runner speed be: x

Faster runner speed: x+2

1 hour 6 minutes = 1.1 hours

Slower: 1.1(x) = 1.1x miles

Faster: 1.1(x+2) = 1.1x+2.2 miles

This means that the faster runner had gone 2.2 miles more than the slower runner.

1.1x + 2.2 > 11 miles (This is true as we know the faster runner is coming back from the 11 mile run)

1.1x > 11 - 2.2 miles

1.1x > 8.8 miles

x > 8.8 / 2.2 miles

x > 8 mph

1.1x < 11 miles (we know this is true as the slower runner has to have gone less than 11 miles as the faster runner met him on his way back)

x < 11 / 1.1 miles

x < 10 miles

8 < x < 10

Although x could be any number including decimal between 8 and 10, the obvious first answer would be 9. However we need to check if this answer is correct.

Slower runner distance to the end:

1.1(9) = 9.9 miles

11 - 9.9 = 1.1 miles

Faster runners distance from the end (when coming back)

1.1(9+2) = 1.1(11) = 12.1 miles

12.1 - 11 = 1.1 miles

The speeds 9 mph and 11 mph are now proven to be the right speeds. Using our equation before, we can figure out the distance from the starting point that they meet at. This is just how far the slower runner has gotten. So, 1.1(9) = 9.9 miles from the starting point

in a science class, 18 student read physic, 25 read mathematics, 23 read chemistry, 9 read physic and mathematics, 10 read mathematics and chemistry and 6 read physic and chemistry. if there are 50 student altogether and 5 student did not read any of the three subject.how many students read .(1) all three subject (2)only mathematics (3) chemistry and mathematics (4) physic and chemistry but not mathematics​

Answers

Answer:

18+25+23=46 multiply by 6=27+50=77 multiply by 5=405

Step-by-step explanation:

Pls Anwer will give 15 points!!!!!!
Find the value of x.

Answers

Answer:

RSM? Anyway. 40º FOR SURE. Remember the degrees sign! :D

Step-by-step explanation:

x = 180º - 75º - 65º

x = 40º

This is because the 75º angle is the same throughout the whole side. It can't change because it's a T R I A N G L E. Really hope this helps!!

Which numbers are irrational?

Select each correct answer.


15−−√

21−−√

−9√

14√

Answers

Answer:

Step-by-step explanation:

square root of 15 is 3.8=irrational

square root of 21 is 4.58=irrational

square root of -9 is doesn't have a real square root

square root of 14 is 3.7 =irrational

please help will mark brainllyist !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11

Answers

Answer:

448 units^2

Step-by-step explanation:

You need to find the area of each of the faces

1/2 * (7*24) = 84

1/2 * (7*24) = 84

5 * 25 = 125

5 * 24 = 120

5 * 7 = 35

Now add all these

448

Is four sixth greater than four ninths?

Answers

Answer:

yes because the high number you go the smaller you pieces the low you go the bigger hope this helped

Step-by-step explanation:

Giving brainliest for the right answer so pls help me!

Answers

Answer:

Radius: 3.5

Diameter: 7

i might be wrong tho im sorry !!

The answer:

Radius = 3.5cm

Diameter = 7cm

I hope I've helped <3

HALP MA PLS!!!!!!!!!!!!!!!!!!!!!!

Answers

Answer:

48 dollars.

Step-by-step explanation:

If you look up "40 percent off of 85" you'll get 48.

Answer:

$48

Step-by-step explanation:

First, you must get the original price (which is $85 in this case) and multiply 40% or convert it to 0.40. So if you multiplied 85 by 0.40 correctly you should get 34. Then you would subtract 34 from 85. So the answer would be $48. This is called a markdown

Three books cost $18.75. How much would 8 books cost? Just type the number.

Answers

Answer:

$50.00

Step-by-step explanation:

18.75/3 x 8=50

One slice of cheese pizza contains 350 calories. A medium-size orange has one-fifth that number of calories. How many calories are in a medium-size orange?

Answers

Answer:

62

Step-by-step explanation:

What two numbers have a product of -36 and a sum of
5?

Answers

Answer: 9, -4

Step-by-step explanation:

We can write an equation:

xy=-36

x+y=5

Factors of -36 are: 1, -36, -1, 36, 2, -13, -2, 13, 4, -9, -9, 4, 6, -6

There are only 2 factors here that add up to -36: 9 and -4

HELP PLEASE URGENT TIMED

Answers

Answer:

9 with an exponent of negative 15

Step-by-step explanation:

9-¹⁵

I need both answers ​

Answers

Answer:

10mn -35m

8rs-2r^2+16r

they are in order.

Answer:

1, 10mn - 35m

2, 8rs - 2r^2 + 16r

Step-by-step explanation:

Point B has coordinates ​(4​,2​). The​ x-coordinate of point A is 1. The distance between point A and point B is 5 units. What are the possible coordinates of point​ A?

Answers

Answer:

5.8 and 7.4

Step-by-step explanation:

Together, Rahman and Elissa have 120 DVDs. Rahman's collection has 5 times as many DVDs as Elissa's collection. Which
equation can be used to determine the number of DVDs in Elissa's collection?

Answers

Answer:

B

Step-by-step explanation:

rahman's collection represents the 5x and Elissa's represents the singluar x. Rahman has five times as many as Elissa, 5x is five timas as big as x. this means x=20. Rahman has 5x20=100 DVDs and Elissa has just 20.

Write the word sentence as an inequality:

A number "x" is no more than 30.

Answers

A number "x" is no more than 30.

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