Security prices in the financial markets fluctuate daily

Assignment Help Financial Management

Reference no: EM131930238

1. Security prices in the financial markets fluctuate daily because they:

A. are inefficient.

B. are slowly reacting to new information.

C. are continually reacting to new information.

D. are over reacting to new information.

E. only reflect historical information.

2. Alice can get a one-year loan at 5% at her bank, while no bank is willing to give Brad a one-year loan for less than 10%. Brad has just had surgery, and must pay the hospital $10,000 immediately, but he has no money today, though he will have money in one year. So Alice oï¬€ers Brad a proposal: she will borrow $10,000 from her bank for one year on her own account, and Brad will repay this loan. In addition, he will pay Alice a sum of money today. What is the maximum amount that Brad should be willing to pay Alice up-front under this arrangement? Alice is not willing to consider borrowing more than $10,000. (2pts)

(a) $454.54 (b) $377.18 (c) $476.19 (d) $500

Reference no: EM131930238

Questions Cloud

Why is it an essential part of international trade : What is correspondent banking? Why is it an essential part of international trade?

Pros and cons of foreign direct investment for corporations : What are the pros and cons of foreign direct investment for corporations?

Difference important in international trade finance : What is the difference between sight and deferred letter of credit? How is this difference important in international trade finance?

What is bankers acceptance : What is bankers acceptance? How is it useful in international trade finance? What is the difference between confirmed and unconfirmed letter of credit?

Security prices in the financial markets fluctuate daily : Security prices in the financial markets fluctuate daily because they:

What is the rate of return that you made : The risk-free interest rate on the date of purchase was 10%. You sell the asset today. What is the rate of return (HPR) that you made?

Why the capital market is so important to you : Write an essay of 1000 words of why the capital market is so important to you?

Retained earnings in investments earning positive returns : A firm is investing retained earnings in investments earning positive returns.

Compute the cash payback period for the new hoist : Compute the cash payback period for the new hoist. Compute the annual rate of return for the new hoist.

User Account

All Pages