As a percentage of disposable personal income

Assignment Help Finance Basics
Reference no: EM13957245

Chapter 7

1. A very small country's gross domestic product is $ 12 million. a. If government expenditures amount to $ 7.5 million and gross private domestic investment is $ 5.5 million, what would be the amount of net exports of goods and services?

2. How would your answer change in Problem 1 if the gross domestic product had been $ 14 million?

3. Assume personal income was $ 28 million last year. Personal outlays were $ 20 million and personal current taxes were $ 5 million. a. What was the amount of disposable personal income last year? b. What was the amount of personal saving last year? c. Calculate personal saving as a percentage of disposable personal income.

Chapter 8

4. A thirty- year U. S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten- year Treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine the maturity risk premium for the thirty- year bond over the ten- year bond.

5. A thirty- year U. S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten- year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. Investors expect inflation to average 1.5 percentage points over the next ten years.
a. Estimate the expected real rate of return on the ten- year U. S. Treasury bond.

b. If the real rate of return is expected to be the same for the thirty- year bond as for the ten- year bond, estimate the average annual inflation rate expected by investors over the life of the thirty- year bond.

6. You are considering an investment in a one- year government debt security with a yield of 5 percent or a highly liquid corporate debt security with a yield of 6.5 percent. The expected inflation rate for the next year is expected to be 2.5 percent.

a. What would be your real rate earned on either of the two investments?
b. What would be the default risk premium on the corporate debt security?

Reference no: EM13957245

Predetermined annual price

Pivotal's Spinnaker software at a predetermined annual price of $ 450 M. Currently Netflix uses Amazon's AWS product and pays $ 400 M annually, but each year this value can

What is jowers cost of capital

If the cost of common equity for the firm is 19.9% the cost of the preferred stock is 12.4%, and the beforetax cost is 10.4%, what is Jowers cost of capital? The firm's tax

Recent annual financial statements

Calculate the 14 ratios (show your calculations) for the company using the two most recent annual financial statements found on the financial information website you used ea

Discount rate on the renegotiated bonds

Five years ago, Highland, Inc. issued a corporate bond with an annual coupon of $7,000, paid at the rate of $3,500 every six months, and a maturity of 25 years. The par (fac

How business is conducted and other businessrelated issues

Look for differences regarding customs, use of space, hand gestures, time orientation, social behavior, how business is conducted, and other businessrelated issues. Write a

Evaluate the visuals that were used in the presentation

Attend a business meeting, a city council meeting, a student council meeting, a business conference, an executive lecture presentation, or some other event where oral presen

Determine the total dollar amount of your profit or loss

Determine the total dollar amount of your profit or loss from your position in the put option. Now assume that instead of taking a position in the put option one year ago, you

How could you measure much stretch in a bolt of this size

The bolt of problem 1 is put in service and its temperature rises to 2508F. How much change in length of the bolt would you expect this increase in temperature to create?

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd