FREE Trial

Explain why a weak economy may cause the risk premium to rise.

Explain why a weak economy may cause the risk premium to rise.

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!
  • Tutor Answer

When the economy is weak the potential loss on risky investments inc…View the full answer


answer-question
Related Book For  answer-question
Personal Finance

Personal Finance

ISBN: 978-0132994347

5th edition

Authors: Jeff Madura

See More Books
Posted Date: October 13, 2015 05:22:40
See More Questions

Students also viewed these Corporate Finance questions

Q:
McDonalds reports that its sales in Europe exceed its sales in the United States. This performance, while reflective of the companys phenomenal success in Europe, was also attributed to the weak...
A:
A weak U S dollar means that one dollar may be exchanged for fewer euros or conv......
Q:
In 2004, McDonalds reported that its sales in Europe exceeded its sales in the United States for the first time. It reported the same result in subsequent years. This performance, while reflective of...
A:
A weak U S dollar means that one dollar may be exchanged for less than previously o......
Q:
Explain in logical terms why a weak economy can cause the net worth of individuals to decline
A:
The values of assets decline during a weak economy b......
Q:
Swish Designs specialises in designing commercial office space in Auckland. The CEO, Ralph Polo has reviewed the financial results and has noticed that operating profits were below budget. He also...
A:
Date Today To President Swish Designs From Clever Student Controller Swish Designs Subject Customer......
Q:
Gray, Inc., a private foundation, reports the following items of income and deductions. Gray is not an exempt operating foundation, and it is not eligible for the 1% tax rate. Interest income $...
A:
a Net investment income is calculated as follows Neither the unrelated bu......
Q:
A 5.0 kg object initially at rest at the origin is subjected to the time-varying force shown in Figure P6.26. What is the objects velocity at t = 6 s? F, (N) 10- 5 - 0- (s) 6. 4. 2.
A:
Visualize We used the force versus time graph to draw th......
Q:
1. Is there a physical product involved? Which is dominant, the product or the service? 2. How unique or how standardized is the product and/or service from the same company from one time to the...
A:
1 Physical products involved in airlines and restaurants are food and seating 2 A car wash is standa......
Q:
1. Did the Hyatts accept the list of contract terms included in the computer box? Why or why not? What is the name used for this type of e-contract? 2. Suppose that the Hyatts experienced trouble...
A:
1 The contract between the Hyatts and CompuEdge was a shrink wrap agreement The company conspicuousl......
Q:
A resident of Australia for tax purposes received salary of $120000, rental income of $26000 and interest income of $4000 during the 2021/2022 income year. All sources of income were from Australia....
A:
To calculate the tax liability for a resident of Australia for the 2021 2022 income year you can fol......
Q:
Tom and Faith are in a partnership sharing profits and losses in the ratio of 3/5 for Tom and 2/5 for Faith. The partnership deed provides for interest on capital at the rate of 5% and interest on...
A:
Tom s Current A c Particulars Amount Particulars Amount To interest on Drawings 3800 10 380 By b......
Q:
Briefly discuss conditions that can cause a shift in the demand for funds and a change in the interest rate.
A:
The three key factors include a shift in government d......
Q:
Why is a high risk premium is an advantage for the investor? Why is a low risk premium an advantage for the investor?
A:
A high risk premium is an advantage for the investor because it......
Q:
The SAT is a standardized test used by many colleges and universities in admission decisions. More than 1.8 million high school students take the SAT each year. The 2019 version of the SAT is...
A:
a b The distribution is nearly symmetrical It could be approx......
Q:
Once legislation receives Royal Assent, what is the role of the courts when it is a dispute about the meaning of the legislation? Provide an example of one Taxation Ruling that seeks to provide a...
A:
Once legislation receives Royal Assent and becomes law the role of the courts in case of a dispute a......
Q:
Jill is 40 Has income of 120k Calculates a war of 66.67% (use 2/3rds) Plans on retiring at 63 Expects to live to 87 Has 50k in current savings Invests 50% in the stock market Once retired plans on...
A:
To calculate how much savings Jill should have left at different ages we can follow these steps 1 Calculate how many years Jill will be in retirement from age 63 to age 87 2 Determine her annual expen......
Q:
Find the maximum profit and the number of units that must be produced and sold in order to yield the maximum profit. Assume that revenue, R(x), and cost, C(x), of producing x units are in dollars....
A:
Answert We know that the profit is the difference between Revenue co......
Q:
Allowable tolerance for your answer of this question is relatively 2 percent. So, work precisely and clear while solving it. Do not enter any UNIT Figure represents a rotating system that has been...
A:
Solution Assume the given system is in static equilibrium for finding out the......
Q:
The Chemical Company has two plants located along a stream (see figure). Plant 1 is generating 20 units of pollutants daily and plant 2 is generating 14 units. Before the wastes are discharged into...
A:
Click to View...
Q:
Assume the same information as in IFRS11.11, except that Pujols intends to dispose of the equipment in the coming year. Cost (residual value $0)..............................$9,000,000 Accumulated...
A:
a December 31 2020 Loss on Impairment 3 600 000 Accumulated......
Q:
What are some of the possible sources of information about a company that could be used for determining the companys competitive stance?
A:
The most accessible of these information sources is the marketplace itself It is important to shop t......
Q:
1. Would you describe the exposure of the Sports Exports Company to exchange rate risk as transaction exposure? Economic exposure? Translation exposure? 2. Jim Logan is considering a change in the...
A:
1 The Sports Exports Company is subject to transaction exposure because the business requires foreig......
Q:
Should an MNC Risk Over hedging? Point Yes. MNCs have some unanticipated transactions that occur without any advance notice. They should attempt to forecast the net cash flows in each currency due to...
A:
If the MNC is confident that it will receive net cash......
Q:
Quincy Corp. estimates the following cash flows in 90 days at its subsidiaries as follows: Determine the consolidated net exposure of the MNC to eachcurrency. Net Position in Each Currency Measured...
A:
The net exposure to Currency......
Q:
The following information was obtained from several accounting and auditing enforcement releases issued by the Securities and Exchange Commission (SEC) after its investigation of fraudulent financial...
A:
1 Professional skepticism primarily consists of two components a questioning mind and a critical ass......
Q:
The marketing vice president for Baxter Surgical Supplies Incorporated (BSSI), a manufacturer and distributor of medical supplies and equipment, was reviewing the company's method of compensation at...
A:
Main Advantages Main Disadvantages 1 Straight Salary is a reasonable approach for......
Q:
1. What does the court find about bringing a series of documents together for purposes of creating a security agreement? 2. What ultimately does the court find that is fatal to the creation of a...
A:
1 The court believes that documents can be combined to form a security agreement but at leas......
Q:
Solve the inequality. Write the solution in interval notation. |15 = x < 7
A:
The so......
Q:
Assign the configurations of the compounds represented by these Fischer projections as R or S. CH -CH2CH3 b) CH2=CH- ) >N- CH-OH CH3 Serine
A:
D CO H a......
Q:
Hudson Company reports the following contribution margin income statement. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales (10,900 units at $225 each) Variable...
A:
Solution 1 Break even point in units Fixed......
Q:
Given the following data, use exponential smoothing with = 0.1 and = 0.6 to generate forecasts for periods 2 through 6. Use MAD and MSE to decide which of the two models produced a better forecast....
A:
Period Actual Forecast Absolute Squared Forecast Absolute Squ......
Q:
The following information pertains to Family Video Company. 1. Cash balance per bank, July 31, $7,263. 2. July bank service charge not recorded by the depositor $28. 3. Cash balance per books, July...
A:
a FAMILY VIDEO COMPANY Bank Reconciliation July 31......
Q:
Consider the database case of keeping record of which user is currently holding which book from a local library. Create 2 entity types Book and User and a relationship type Borrows. a) Suppose each...
A:
Answer ay Solution other Attributes o bile so......
Q:
Which of the following related to Transfer payment? Payment made to housewife O All the above O wear and tear cost O Pocket money to children
A:
d Pocket money to children Pocket money to children would be considered......
Q:
Southwoods is a medium-sized accounting firm that provides services in the areas of audit, taxation and investment advice. Apply value chain and other classifications to the costs listed below. (More...
A:
Some of these classifications are open to interpretation The real test is whether......
Q:
Health-aware is a large medical practice in Sydney owned by Dr Palmer, a medical entrepreneur, and staffed by salaried doctors. Until recently the practice had been managed by Palmer's son, Jason....
A:
1 Healthaware s overhead includes all costs apart from direct labour This approach is quite common in service businesses where direct labour is the ma......
Q:
Calculate (as a function of the impact parameter) for Rutherford scattering, in the impulse approximation. Show that your result is consistent with the exact expression (Problem 10.1(a)), in the...
A:
The exact answer is the same only with cot 2 in place of 2 cot So I must show that cot 2 2 c......
Q:
How far do the ethical rules reach? Do they include conduct that occurs before a personbecomes a lawyer? Conduct you observe but don't engage in? Conduct that does notoccur in the course of...
A:
1 Ethical Rules Reach Ethical rules for lawyers typically cover a broad spectrum of conduct but the extent of their reach can vary based on jurisdiction and specific rules Here are some general guidel......
Q:
The united states has a documented history of policing dating back to colonial America. The establishment of the police force as we know it began in the 19th century; however the number of men...
A:
1 Working Conditions of the First Policewomen The working conditions for the first policewomen were often challenging and quite different from their male counterparts Here are some common aspects of t......
Q:
A, B, C, D, and E decided to form a partnership. They orally agree that all of them will contribute P30,000.00 each for the creation of the partnership. They orally agreed that A and B are the...
A:
The status of the partnership you ve described may vary depending on the jurisdiction and the legal requirements in place However based on general pri......
Q:
At December 31, 2013 and 2014, Sloan Corp. had outstanding 9,000 shares of P100 par value 8% cumulative preference shares and 30,000, P10 par value, ordinary shares. At December 31, 2013, dividends...
A:
To determine the amounts payable on each class of share we need to calculate the dividends payable......
Q:
A researcher runs the following hedonic model with the Eviews output presented below. log(selling price) = b + b log(SFLA) + bBEDS + b3BATHS + bSTORIES +b5VACANT + b Age + e Dependent Variable:...
A:
Q7 As b1 dlog selling price d log sfla So b1 estima......
Q:
Vermont Corp. enters into the following transactions during 2012: July 1: Paid $10,000 to acquire on the open market $10,000 face value of Maine bonds. The bonds have a stated annual interest rate of...
A:
The effect of the purchase of bond on July 1 can be identified and analyzed as fo......
Q:
In the busy port of Chennai, India, the number of containers loaded onto ships during a 15-week period is as follows: 1. Develop a linear trend equation to forecast container loadings. 2. Using the...
A:
1 2 F 15 128 71 36 8 15 680 72 F 16 128 71 36 8 16 717......
Q:
The worldwide market share for the Mozilla Firefox web browser was 17% in a recent month. (Data extracted from netmarketshare.com.) Suppose that you decide to select a sample of 100 students at your...
A:
a PHStat output H 0 0 17 H 1 0 17 Decision rule If p value 0 05 reject H 0 Test statistic p v......
Q:
Web site communication through blogs and forums is becoming a key marketing tool for companies. The Journal of Relationship Marketing (Vol. 7, 2008) investigated the prevalence of blogs and forums at...
A:
Using MINITAB the pie chart is Companies and Employees represent 38......
Q:
1 History of Communication 1800s - Explain in about 100 words what communication and the media was like in the 1800s 2 History of Communication 1900s - Explain in 100 words what communication and the...
A:
Communication 1800s The history of communication started thousands of years ago at the period when d......
Q:
In a recent study, Americans stated that they were willing to pay $70 billion to protect all endangered species and also stated that they were willing to pay $15 billion to protect a single species....
A:
This illustrates the preference knowledge problem Lindale pricing requ......
Q:
Corporate managers work for the owners of the corporation. Consequently, they should make decisions that are in the interests of the owners, rather than in their own interests. What strategies are...
A:
Shareholders can a Ensure that employees are paid wit......
Q:
The Walk Rite Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men's shoes with identical unit costs and selling prices. A unit is defined as a pair of shoes....
A:
Contribution margin per unit 30 21 9 Breakeven units 360 000......
Q:
Determine whether the following symbolized arguments are valid or invalid by constructing a truth table for each.
A:
Click to View...
Q:
The Murphy County Commissioners adopted the following General Fund budget for the 20X8 fiscal year: Murphy County General Fund Budget20X8 Estimated Revenues: Taxes . . . . . . . . . . . . . . . . . ....
A:
Expenditures Subsidiary Ledger General Ledger 2a 4b 5 1 App......
Q:
Frank, age 63, and Linda, age 65, are retired and each have an income of approximately $100,000. The bulk of Linda's income comes from her defined benefit pension plan (DBPP), CPP and OAS, while...
A:
Income splitting opportunities can be beneficial for Frank and Linda to optimize their tax situation......
Q:
Adjustments to be effected on 28 February 2019 The following was found as per physical count 1.1). Trading Stock RB0 300 1.2). Packing Material R700 2). Depreciate equipment at 10 % p.a on the...
A:
STATEMENT OF FINANCIAL POSITION ABC TRADERS Income Statement for the yea......
Q:
A car company says that the mean gas mileage for Edit Question 23.A car company says that the mean gas mileage for its luxury sedan is at least 25miles per gallon (mpg). You believe the claim is...
A:
Click to View...
Q:
Explain how data transmission works at the Network Layer from computer A to B and from computer A to C in Figure 2! A
A:
ANSWER The data transmission from computer A to B is by the use of......
Q:
A factory engaged in manufacturing plastic buckets is working to 40% capacity and produces 10, 000 buckets per annum. The present cost break up for one bucket is as under, Material Rs.10 Labour Rs.3...
A:
Answer Solution Statement showing Profit and Break Even Point at 50 and 9......
Q:
Opioid receptors are found throughout the body a. Only in people who have become addicted to opiates. b. In increasing numbers with chronic pain conditions. c. To incorporate pain perception and...
A:
The correct answer is b In increasing numbers with chronic pain conditions Opioid r......
Q:
Migraine headaches. a. Occur during sleep and involve sweating and eye pain. b. Occur with stress and feel like a dull band around the entire head. c. Often occur when drinking coffee. d. Are...
A:
Among the given options the correct answer is d Are throbbing headaches on one......
Q:
The text describes three important ways that cells protect their genes. List these methods.
A:
DNA Repair Mechanisms Cells have intricate DNA repair mechanisms that help to fix errors or damage i......
Q:
Proper administration of an ordered narcotic a. Can lead to addiction. b. Should be done promptly to prevent increased pain and the need for larger doses. c. Would include holding the drug as long as...
A:
The proper administration of an ordered narcotic involves careful consideration of the patient s medical condition pain management needs and potential......
Q:
A nurse would anticipate the use of general anesthetics for which reasons? a. To produce analgesia b. To produce amnesia c. To activate the reticular activating system d. To block muscle reflexes e....
A:
The nurse would anticipate the use of general anesthetics for the following reasons c To activate th......
Q:
Hckel MO Theory assumes that the overlap integral Hij between p atomic orbitals (pAOs) that do not belong to neighboring Carbon atoms is zero. However, in a few cases steric factors allow for some...
A:
Click to View...
Q:
Research corporate acquisitions using Web resources and then answer the following questions: Why do firms purchase other corporations? Do firms pay too much for the acquired corporation? Why do so...
A:
Firms purchase other corporations to to prevent this company from......
Coherence In EU Competition Law 1st Edition - ISBN: 0198749155 - Free Book