subject
Business, 19.07.2019 20:20 glstephens04

(term structure of interest rates) you want to invest your savings of $23 comma 000 in government securities for the next 2 years. currently, you can invest either in a security that pays interest of 7.5 percent per year for the next 2 years or in a security that matures in 1 year but pays only 5.8 percent interest. if you make the latter choice, you would then reinvest your savings at the end of the first year for another year. a. why might you choose to make the investment in the 1-year security that pays an interest rate of only 5.8 percent, as opposed to investing in the 2-year security paying 7.5 percent? provide numerical support for your answer. which theory of term structure have you supported in your answer? b. assume your required rate of return on the second-year investment is 10.2 percent; otherwise, you will choose to go with the 2-year security. what rationale could you offer for your preference?

ansver
Answers: 2

Another question on Business

question
Business, 21.06.2019 23:00
Which of the following statements about the relationship between economic costs and accounting costs is true? multiple choice accounting costs are equal to or greater than economic costs. accounting costs must always equal economic costs. accounting costs are always greater than economic costs. accounting costs are always less than or equal to economic costs.
Answers: 2
question
Business, 22.06.2019 10:30
The advertisement demonstrates a popular way companies try to sell a product. what should consumers consider when it comes to the price of this product? it includes shipping and handling costs. it takes into account maintenance costs. it explains why this price is a good deal. it makes the full cost appears lower than it is.
Answers: 1
question
Business, 22.06.2019 20:30
Data for hermann corporation are shown below: per unit percent of sales selling price $ 125 100 % variable expenses 80 64 contribution margin $ 45 36 % fixed expenses are $85,000 per month and the company is selling 2,700 units per month. required: 1-a. how much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000? 1-b. should the advertising budget be increased?
Answers: 1
question
Business, 22.06.2019 22:40
Utilization will always be lower than efficiency because: a. effective capacity is greater than design capacityb. expected output is less than actual output.c. effective capacity equals design capacity.d. effective capacity is less than design capacity.e. expected output is less than rated capacity.
Answers: 3
You know the right answer?
(term structure of interest rates) you want to invest your savings of $23 comma 000 in government se...
Questions
question
Mathematics, 22.09.2019 23:30
question
Mathematics, 22.09.2019 23:30
question
Advanced Placement (AP), 22.09.2019 23:30
Questions on the website: 13722363