(a)discuss the general equilibrium approach to interest rate determination. (b) what effect does an increase in saving has on equilibrium interest rate and income (c) what is financial intermediation

Calculate the amount you will receive from the sale of a certificate of initial deposit of 9 months, initial amount of 150000 at 5% interest rate, when the corresponding risk and long-term placements yield 10% and 6, 4, and 2 months remain to expire

Investment Theory:

Indicate whether the statement is true, false, or uncertain, and explain why.

5. Weak-form efficiency implies strong-form efficiency, as well.

6. The fact that nearly half of all professionally managed mutual funds outperform the S&P 500 in a typical year violates market efficiency.

7. In an informationally efficient market, since every asset is correctly priced, diversification does not yield any extra benefit.

Investment Theory:

For each of the following, indicate whether the statement is a violation of the Efficient Markets Hypothesis and, if so, of which form. Explain why. Your answers should be short and concise.

1. Stocks before large dividend increases have consistently positive abnormal returns. The dividend increase is publicly announced.

2. Company A announced its intention to hire Mr. X, a well-known specialist in the industry. Its stock price gradually rose over the two weeks following the announcement.

3. You observe significant positive serial correlation between non-overlapping market returns (e.g. weekly returns of security A are positively correlated with the returns the preceding week).

4. You observe significant negative serial correlation between non-overlapping market returns (e.g. monthly returns of security A are negatively correlated with the returns the preceding month).

Complete problem: Balance Sheet Analysis

o Complete the balance sheet and sales information in the table that follows for XYZ, Inc., using the following financial data:

o Show your work.

Total assets turnover: 1.5 Gross profit margin on sales: (Sales – Cost of goods sold)/Sales = 25% Total liabilities-to-assets ratio: 40% Quick ratio: 0.80 Days sales outstanding (based on 365-day year): 36.5 days Inventory turnover ratio: 3.75 Partial Income Statement Information _______________________________________________________________________________________

Sales ____________

Cost of goods sold ____________

Balance Sheet Information

______________________________________________________________________________________

Cash ___________ Accounts payable ___________ Accounts receivable ___________ Long-term debt 50,000 Inventories ___________ Common stock ___________ Fixed assets ___________ Retained earnings 100,000 Total assets $400,000___ Total liabilities and equity __________

We would like to invest 1 000 000 USD and we have two bonds in our portfolio such as:

A….maturity = 5, coupon rate = 0 %, YTM = 10 %, FV = 100 USD

B…maturity = 2, coupon rate 12 %, YTM = 12 %, FV = 100 USD

What would be the yield of this portfolio when investment horizon is 3 years and

1. When YTMs will be the same
2. When YTMs will increase by 1 %
3. When YTMs will increase by 2 %
4. When YTMs will decrease by 1 %
5. When YTMs will decrease by 2 %

WA=0,36 and WB=0,64

Refer to APPLE INC and assess the financial statements using the ratio tools. Select at least one profitability, liquidity, solvency, and market valuation ratio and evaluate the results. Based on your findings, post an initial response to the following:

• What do the metrics tell you about the company’s performance? Support your answer by explaining the results from your assessment.
• If you were considering investing in the company, what other questions would you ask to gain further insight into the performance?

Your Discussion should be a minimum of 250 words in length and not more than 450 words.

Explain the work please.

In the provided scenario, you address the time value of money also known as discounted cash flow analysis. This type of analysis is crucial to being able to viably analyze financial statements.

The start-up firm you founded is trying to save $10,000 in order to buy a parcel of land for a proposed small warehouse expansion. In order to do so, your finance manager is authorized to make deposits of $1250 per year into the company account that is paying 12% annual interest. The last deposit will be less than $1250 if less is needed to reach $10,000.

o How many years will it take to reach the $10,000 goal and how large will the last deposit be? Show your work.

1)what financial innovations are best explained as attempts to avoid regulations? 2)what are the reasons for the decline of traditional banking?

2)what are the reasons for the decline of traditional banking?

Discuss the pros and cons of taking a company private. Is a private firm better positioned than a public company to make acquisitions?

Karuda Transportation Sdn Bhd provides bonded trucking services to its clients. The company is evaluating a potential lease arrangement on a truck that cost $250,000 and falls into the MACRS 5-year class. The applicable MACRS depreciation rates are 20%, 32%, 19%, 12%, 11% and 6%. Karuda has a ready credit line from their banker, a term loan financing with an attractive rate of 10% p.a. if they decided to borrow money and buy the asset rather than lease it. The 5-equal instalments are to be paid at the end of each year.

The truck is expected to have a 5-year economic life, and its estimated residual value is $25,000. If Karuda buys the truck, it would purchase a maintenance contract with the Vendor, Scandia Truck & Bus Sdn Bhd that costs $6,000 per year, payable at the end of each year. Karuda plans to keep the truck and use it beyond its recovery period.

Karuda is also required to insure the trucks and the annual insurance premium is calculated at a rate of 1.75% of the insured value. For the first year, the truck is insured for $250,000. For the subsequent years, the book value of the asset is taken as the yearly insured value. Annual insurance premium are being paid at the beginning of the year.

The lease option calls for $60,000 lease payment, payable in advance. All other costs will be borne by the lessor. The company intends to exercise its option to purchase the truck at the end of the lease period for $12,000. Karuda’s tax rate is 30 percent.

1. Calculate the after-tax cash flows associated with each of the alternative.
2. What is the Net Advantage to Leasing? Should the firm lease or buy?

A security exists that promises to pay $300 in one year’s time.  If the market rate of interest is 20% p.a. and the security is for sale for $200, what would you do and why? Ultimately, what would you expect to happen?

SHOW/ EXPLAIN THE WORK PLEASE

Complete problem: Balance Sheet Analysis

o Complete the balance sheet and sales information in the table that follows for XYZ, Inc., using the following financial data:

o Show your work.

Total assets turnover: 1.5 Gross profit margin on sales: (Sales – Cost of goods sold)/Sales = 25% Total liabilities-to-assets ratio: 40% Quick ratio: 0.80 Days sales outstanding (based on 365-day year): 36.5 days Inventory turnover ratio: 3.75 Partial Income Statement Information _______________________________________________________________________________________

Sales ____________

Cost of goods sold ____________

Balance Sheet Information

______________________________________________________________________________________

Cash ___________ Accounts payable ___________ Accounts receivable ___________ Long-term debt 50,000 Inventories ___________ Common stock ___________ Fixed assets ___________ Retained earnings 100,000 Total assets $400,000___ Total liabilities and equity __________

. In the provided scenario, you address the time value of money also known as discounted cash flow analysis. This type of analysis is crucial to being able to viably analyze financial statements.

The start-up firm you founded is trying to save $10,000 in order to buy a parcel of land for a proposed small warehouse expansion. In order to do so, your finance manager is authorized to make deposits of $1250 per year into the company account that is paying 12% annual interest. The last deposit will be less than $1250 if less is needed to reach $10,000.

o How many years will it take to reach the $10,000 goal and how large will the last deposit be? Show your work.

Bonus Versus Stock

A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why?

B. What are the advantages and disadvantages of each option? Be sure to support your answers.

C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.