a)What is the expected relationship between the relative real interest rates of two countries and the exchange rate of their currencies?
b. Assume that the level of capital flows between the U.S. and the country of Krendo is negligible (close
to zero) and will continue to be negligible. There is a substantial amount of trade between the U.S. and the country of Krendo and no capital flows. How will high inflation and high interest rates affect the value of the kren (Krendo’s currency)? Explain.
In: Finance
4. Todor owns a U.S. corporation that operates a subsidiary corporation in Bulgaria. Because of the world wide tax approach adopted in the United States, all income of the Bulgarian subsidiary is potentially taxed twice, once in Bulgaria and again in the United States. Name and provide a brief description of the adjustments available on the U.S. return of the parent corporation which mitigate the impact of this potential double tax on all Bulgarian income?
In: Accounting
Evaluate the effects of each of the following events on the market for loanable funds. Explain the effects on savings, investment, and the real interest rate.
a. Assume the next president of the U.S. is fiscally responsible and runs a government budget surplus.
b. The government decides to forgive some of the $1.53 trillion in student loan debt.
c. China decides to reduce net capital inflows into the U.S.
d. There is inflation, and the real interest falls.
In: Economics
Suppose that cholesterol levels for women in the U.S. have a mean of 188 and a standard deviation of 24. A random sample of 20 women in the U.S. is selected. Assume that the distribution of this data is normally distributed.
Are you more likely to randomly select one woman with a cholesterol level of more than 200 or are you more likely to select a random sample of 20 women with a mean cholesterol level of more than 200? Explain.
In: Math
2. Alternative price indexes
Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator.
The GDP deflator for this year is calculated by dividing the _______ using _______ by the _______ using and multiplying by 100. However, the CPI reflects only the prices of all goods and services _______.
Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply.
An increase in the price of a Chinese-made car that is popular among U.S. consumers.
A decrease in the price of a Treewood Equipment feller buncher, which is a commercial forestry machine made in the U.S but not bought by U.S. consumers.
In: Economics
Suppose that 15% of the U.S. population has some type of learning disorder
a) Consider a simple random sample of size 300. Check that the conditions for the sample proportion to be approximately normal are met. What is the probability that the proportion of people in the sample with a learning disorder is at least 0.12?
(b) How would you compute the probability that at least 36 members of a simple random sample of size 300 chosen from the U.S. population will have a learning disorder? Explain what you would do, but do not actually compute it.
(c) It turns out the probability that at least 36 members of a simple random sample of size 300 chosen from the U.S. population will have a learning disorder is approximately 0.9412. Compare this answer in part a. Would you expect them to be similar? Why or why not?
In: Statistics and Probability
Consider the national income accounting data provided in the following table:
Item Billions of Dollars
Gross private domestic investment $45
Personal Taxes 30
Proprietor Income 50
Transfer Payments 20
Indirect business taxes 15
Corporate income taxes 10
Government expenditures 39
Consumption of fixed capital (depreciation) 10
U.S. exports 20
Compensation to Employees (wages) 175
Dividends 15
Corporate Ret. Earnings (Undistributed Profits) 5
Net foreign factor income earned in U.S. 3
Rental Income 25
Social security contributions 5
U.S. Imports 15
Interest Income 35
Statistical Discrepancies 2
i) Calculate the dollar value of gross domestic product (GDP).
ii) Determine the dollar value of consumption spending in the economy.
In: Economics
6. Karen Johnson is responsible for the U.S. equity portion of her company’s pension plan. She is thinking about trying to boost the overall alpha in U.S. equities by using an enhanced index fund to replace her core index fund holding.
A. The U.S. equity portion of the pension plan currently consists of three managers (one index, one value, and one growth) and is expected to produce a target annual alpha of 2.4 percent with a tracking risk of 2.75 percent. By replacing the index manager with an enhanced indexer the target alpha changes to 2.8 percent with a tracking risk of 2.9 percent. Does this change represent an improvement? Why?
B. Johnson also needs to decide whether she prefers a stock-based or a synthetic enhanced index manager. What are the advantages and disadvantages of each?
In: Finance
1) Past research indicates that 64% of U.S. voters oppose capital punishment. A pollster wishes to estimate the current proportion of U.S. voters who oppose capital punishment to see if the percentage has changed.
a)How many voters should be surveyed in order to be 95% confident that the true proportion is estimated to within 4%?b)Suppose they ignore the sample size found in part (a) and decide to select a random sample of 500 voters and find that 335 of them oppose capital punishment. Find and interpret a 95% confidence interval for the true percentage of U.S. voters who oppose capital punishment. Be sure to check the conditions and write them down!
c) Should the pollsters conclude that the percentage of current voters who oppose capital punishment has changed? Explain
In: Statistics and Probability
According to IRPT, only the most skilled arbitrageurs are able to earn pure profits from their covered interest arbitrage activities. TRUE OR FALSE?
Aluminum sells in the U.S. for $225/unit, and sells in Canada for CD150/unit. If the spot rate is $1.75/CD, arbitrageurs would buy aluminum in Canada and sell it in the U.S. TRUE OR FALSE?
PPP holds equally for services and for commodities. TRUE OR FALSE?
The current spot rate is $0.95 = 1.0, and interest rates on 1-yr risk-free securities in Europe and the U.S. are 9% and 4% respectively. Your employer asks you to negotiate a 1-yr forward contract that will enable him to exchange dollars for 1,000,000. If a bank quotes a forward rate of $0.93, on a 1-year contract, you should accept it. TRUE OR FALSE?
In: Finance