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

This project allows you to think critically and apply decision-making management techniques. In this project,  you need to solve a bond portfolio problem, a diversified portfolio p

HOW TO RECORD INVENTORY AT NET REALISABLE VALUE ON JOURNAL

natasha kingrey to calculate present value of salary differential for completing mba

A lawn care company started business on January 1, 2012. The company billed clients $105,000 for lawn care services completed in 2012. By December 31, the company had received $84,

DUTIES OF TRUSTEES 1) Not to profit from the trust : A trustee may not receive remuneration except: By order of the court, if the trust is very onerous or the services of the

Q. Show the Foreign Tax Credit? Foreign Tax Credit - A U.S. taxpayer who pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determin

PROVABLE DEBTS All debts and liabilities present or future, certain or contingent, are provable in bankruptcy, except: 1) Claims for unliquidated damages in tort; 2) Debts

How to Determine the financial reports of businesses In response to criticisms that financial reports of some businesses aren't clear enough to users, accounting rule makers ha

Define the term Relevance - accounting information Accounting information should have the ability to influence decisions. Except this characteristic is present, there is ac