true or false
We consider a short-term U.S. Government security, namely a T-Bill, to be the most risk free security you can buy because there is no IP or MRP.
false, it is considered risk free because there is no default risk, as US is virtually considered as non defaultable
true or false We consider a short-term U.S. Government security, namely a T-Bill, to be the...
When the U.S government borrows money on a short-term basis (a years or less), it does so by selling what are called Treasure bills, or T-bills for short. A T-bill is a promised by the government to repay a fixed amount at some time in the future – for example, 3 months or 12 months. Treasury bills are pure discount loans, If a T-bill promises to repay $10,000 in 12 months and the market interest rat0 is 7 percent. How...
This is for intro to business, I need help with is true or
false question
True/False-write "T" or "F" to the left of each numbered statement. 1. An initial public offering (IPO) represents the fir public offering (IPO) represents the first time a corporation's stock is offered and sold to persons outside of the company. 2. A stock exchange provides a marketplace where the public can directly buy and sell securities without the help of intermediaries. 3. Dividends represent a...
You own stock in 3M and you also own a risk-free asset (a U.S. t-bill). Assume that the market risk premium is 9.3% and the return on the risk-free asset is 1.8%. 3M currently has a beta = 1.2. What is the beta of the market portfolio?
If the interest rate on short term US government debt is 0.7, the comporarable rate for Japanese government debt is 2, and you can buy 130 yen with a dollar, how many yen will you be able to buy with a dollar 1 year from today?
During the past year, you had a portfolio that contained U.S. government T-bills, long-term government bonds, and common stocks. The rates of return on each of them were as follows: U.S. government T-bills 3.40 % U.S. government long-term bonds 4.70 U.S. common stocks 6.20 During the year, the consumer price index, which measures the rate of inflation, went from 100 to 114 (1982 – 1984 = 100). Compute the rate of inflation during this year. Round your answer to one...
1. (True/False. Explain) Bond price approaches Face Value as it moves closer to maturity. 2. Black Sheep Corporation's 5-year bonds yield 7.00%, and 5-year T-bonds yield 5.15%. The real risk-free rate is r* - 3.0%, the inflation premium for 5-year bonds is IP - 1.75%, the liquidity premium for Keys' bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t-1)x0.1%, where t = number of...
27. If the U.S. government takes the value of in-kind transfers into consideration, the U.S. poverty rate decreases. True False 29. The balance of payments is the domestic price of a foreign currency. True False 30. The inequality trap has a negative impact on human capital development. True False 31. According to Rostow's stages of economic development, poor nations must increase their farm productivity so that some workers can leave farming and move into other industries. True False 32. The...
Maria is a professional tennis player, and your firm manages her money. She has asked you to give her information about what determines the level of various interest rates. Your boss has prepared some questions for you to consider. 1. Can you suggest the fundamental factors that typically affect the cost of money, or the level of interest rates in the economy? What are other factors we should also take into consideration? 2. Consider the terms inflation premium (IP), default...
You can buy a Treasury-bill for $98.75, and in three months the T-bill pays you $100. What is the 3-month Nominal Risk Free Rate? Express your answer as a percentage, for example 3.18% should be entered as 3.18 without the percentage sign.
It is always better to take short term capital gain because we pay less taxes that long term capital gain. A. TRUE B. FALSE