Show that a price is not an equilibrium price for asset, Financial Accounting

1. Suppose that the one-period rate is 4% and that the two-period rate is 6%. What sort of expectation for the one-period rate next period makes this situation an equilibrium?

2. Consider an asset paying 1 next period and 2 in two periods. Suppose that the one-period rate is 4% and that it will remain constant. Show that a price of 2.5 is not an equilibrium price for this asset.

Posted Date: 3/20/2013 2:16:48 AM | Location : United States







Related Discussions:- Show that a price is not an equilibrium price for asset, Assignment Help, Ask Question on Show that a price is not an equilibrium price for asset, Get Answer, Expert's Help, Show that a price is not an equilibrium price for asset Discussions

Write discussion on Show that a price is not an equilibrium price for asset
Your posts are moderated
Related Questions
Illustration of Admission of a new partner XYZ have been trading as equal partners having capital contributions of £300,000, £250,000 and £200,000 respectively.  They  agreed

Statute of Limitations - This sets out the period within that actions may be brought upon claims or within which rights may be enforced. As it concerns to tax returns, statute of l

The following information is for the third quarter of this year:   Planned Actual   Production 92,000 units

1. Jepsen Corp had the following transactions relating to shares of stock: • Issued 1,000 shares • Purchased 100 shares • Re-issued 50 shares • Declared and distributed a 2-1 stock

I need help on my accounting assignment

1.discuss how the vat system works 2.list and explain the vat supply categories, provide examples in each category write as an essay of 500 words

Suppose that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 8%. Your company is about as risky as the avera

The Soft-Flow Ink Company's income statement for the preceding year is presented below. Except as noted, the costs revenue relationship for the coming year is expected to follow t

Indicate how each of the following transactions affects the accounting equation. a.Purchase of supplies on account. b.Payment of wages. c.Cash sale of goods for more than their cos

#explain the accounting cyclequestion..