Question

In: Finance

a.True or false. The Federal Insurance Office of the U.S. Treasury offers insurance companies the opportunity...

a.True or false. The Federal Insurance Office of the U.S. Treasury offers insurance companies the opportunity of an optional federal charter, which allows them to be regulated at the federal level rather than by multiple states.

b.A stock with a 5% dividend yield is priced at $100. If the projected growth rate of dividends is 3% (forever), what is the company’s cost of equity according to the dividend discount model?

c. Suppose the exchange rate with the United Kingdom is 25 dollars per UK pound, and that the US one year interest rate is 2% while the UK one year interest rate is 0.5%. What is the expected exchange rate in one year if interest parity holds?

Expert Solution

a.

True

The optional federal charter allows the insurance company to choose between the state regulatory system or the federal regulatory system.

b.

Formulas used to solve the question are

Cost of equity is calculated from Dividend Discount Model

c.

Spot Rate USD/GBP = 25

US interest rate (domestic rate) = 2%

UK interest rate (foreign rate) = 0.5%

jeff jeffy answered 4 months ago

16.a The U.S. Treasury offers to sell you a bond for $613.81. No payments will be...

16.a The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? ( ) 16.b The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 5 years from now, at which time it...

Current federal government insurance programs includes flood insurance. True False

Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The...

Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Banking System's balance sheet will specifically show: a. only an increase in liabilities of $2 billion. b. b. only a decrease in assets of $2 billion. c. no net change in assets or liabilities, only a change in the composition of assets with securities decreasing and reserves increasing by $2 billion respectively. d. no net change in assets or liabilities, only a change in...

Which of the following statements is FALSE? A. Treasury Bills are U.S. government zero-coupon bonds with...

Which of the following statements is FALSE? A. Treasury Bills are U.S. government zero-coupon bonds with a maturity of up to one year. B. Zero-coupon bond almost always sells at a discount. C. Coupon bond can sell at a discount, at par, or at a premium. D. Zero-Coupon Bond does not make coupon payments E. Coupon bond pays only face value and no coupon at maturity.

Compare the role of the individual patient, insurance companies, and the state and federal government in...

Compare the role of the individual patient, insurance companies, and the state and federal government in paying for mental health services.

1. The Federal Reserve holds deposits from A) Consumers. B) Banks. C) The U.S. Treasury. D)...

1. The Federal Reserve holds deposits from A) Consumers. B) Banks. C) The U.S. Treasury. D) Large corporations. 2. If the Fed's objective is to stimulate the economy, which of the following gives the correct sequence of events? A) The money supply increases, interest rates decrease, investment increases, and AD increases. B) The money supply increases, interest rates decrease, investment increases, and AS decreases. C) The money supply decreases, interest rates increase, investment decreases, and AD decreases. D) The money...

3.What are the reasons behind why the Federal Reserve uses U.S. Treasury securities for open market...

3.What are the reasons behind why the Federal Reserve uses U.S. Treasury securities for open market operations?

Medical insurance is beginning to cover telemedicine office visits. True or False Telepsychiatry is the recommenced...

Medical insurance is beginning to cover telemedicine office visits. True or False Telepsychiatry is the recommenced therapy for anyone regardless of mental disorder. True or False A gamma knife is used to make incisions. True or False MIDAS is a US funded plan for researchers to use computers to model diseases. True or False RFID stands for radio frequency identification decoder and is used in many hospitals to monitor patients. True or False

Northeastern Insurance Company is considering opening an office in the U.S. The two cities under consideration...

Northeastern Insurance Company is considering opening an office in the U.S. The two cities under consideration are Philadelphia and New York. The factor ratings (higher scores are better) for the two cities are given in the following table. Factor Weight PhiladelphiaPhiladelphia New YorkNew York Customer convenience 0.25 75 75 Bank accessibility 0.20 40 85 Computer support 0.20 90 70 Rental costs 0.15 85 50 Labor costs 0.10 80 50 Taxes 0.10 90 55 Based on the given information, the...

True or False--- In the Hartford Fire Insurance Co. case, the U.S. Supreme Court determined that...

True or False--- In the Hartford Fire Insurance Co. case, the U.S. Supreme Court determined that it could not assert jurisdiction over European companies in competition matters unless the companies had a direct physical presence in a U.S. state.