For example, if I pay a high price to purchase a bond, then a smaller percentage of what I get back counts as interest. Since I am paying more to get this bond, then less of it counts as interest. If I pay less than the face value for a bond, then the rate of return on that bond will be greater than the coupon rate. 5) If RRR (Required Reserve Ratio) is larger, is the Money Multiplier bigger or smaller? Why?
The Trans Mountain pipeline has characteristics or properties of Natural Monopoly, so it falls into the products of natural monopoly. When there is an economic of scale, that is, average cost decreases as quantity increases, the natual monopoly occurs. As a result, one firm is able to supply total amount of the products at a lower cost in the market than two or more firms. If the govenment does not regulate the Natural Monopoly, it may not benefit the social welfare and the optimal outcomes. In other words, they will produce much less and charge a higher price than social optiaml lead to a high price,low average costs and high profits.
b. the effective loan yield will increase as a result of the decrease in the LIBOR and the bank would be able to offer more loans in the future. 2. a. The effective loan yield will increase as a result of 1% increase in the LIBOR and the value of the currency will also increase allowing the bank to offer more loans at attractive rates. b. The effective loan yield will decrease as a result of 0.75% decrease in the LIBOR and the value of the currency will also decrease which will force the bank to charge higher borrowing rates and may not be able to make loans in the
B. HPR = Strike Price – Stock Price – Put Price / Put Price HPR = (165 – 150 – 2.85) / 2.85 = 426.32% C. The put option’s return and share price are slightly inverse. The return of the put contract decreases and stock prices of AAPL increases. The reason it isn’t completely inverse is because as the graph reaches the strike price, the return equals to -100%. This is due to the put option and the insurance it provides so the investor will only lose $285 which is the put contract price. 3.
In a recession, demand is depressed, and it is expected to have a budget deficit. Trying to attain a budget surplus in a recession will involve higher taxes and lower spending – but these policies could make the recession worse. Therefore, it is better to wait until the economy recovers, and automatic fiscal stabilizers improve (higher growth automatically leads to higher income tax revenues)
This finding contradicts the notion of banking being a service with high credence features, making evaluation of core service (technical quality) difficult. However, they also found that other drivers of satisfaction were the financial statements and services provided through different delivery channels. Their study suggests that the impact of service delivery factors differs substantially on customer satisfaction. For instance they found that for customers who trade heavily and have high investment assets, the effect of an automated telephone service is higher than the other drivers of
Bank of America’s rates range from a 3 month 0.01% APY to a 6 month 0.03% APY to a 1 year 0.05% APY. However, Bank of America’s APY caps at 48 months, with a maximum APY of 0.15%. Citi Citi’s most popular CD rates require a minimal deposit of $500. Citi’s rates range from a 3 month 0.05% APY to a 6 month 0.07% APY to a 1 year 0.15% APY. Moreover, Citi’s 48 month APY is 0.35% and its 60 month APY is
An expansion of the economy brings about a corresponding increase in quantity demanded for normal goods while a contraction in the economy causes a decline in the demand for the normal goods. On the contrary, the demand for inferior goods is not recurrent (Pech 24). The more the positive value for income elasticity of demand for a product is, the more sensitive consumer demand is to the fluctuations in national income. Banks can take advantage of the income elasticity of demand by analyzing the patterns in demand for money by its customers as their real income changes. Banks can provide customers with more credit cards should there be a period of economic expansion marked by a substantial increase in the income of customers (Hosek 5).
For each investment, it’s enough to know that long term was chiefly concerned with two questions: what was the anticipated average return, and how much did the return in any typical year tend to vary from the average. Meriwether’s traders were concerned with limiting risk. The idea that they could do so by targeting specific level of volatile was central to how they ran the fund. If the portfolio was a little too quiet, they’d borrow more , raising the “vol” , if it was to volatile , they’d reduce their leverage , coming the fund down . If you follow the market, you have a gut feeling that stocks or bonds are often inexplicably volatile.
Tranche A was a three-year floating note with a 3.25% spread on the London Interbank Offered Rate (LIBOR). Tranche B was a four-and-a-half year floating note with a 4.25% spread on the LIBOR. The second major source of debt was a $90 million subordinated short-term floating bridge loan with an ascending interest rate starting at a 6.25% spread on the LIBOR. Sources