The akron effect refers to

Assignment Help Financial Management

Reference no: EM131339702

1. Which of the following does NOT correctly complete the sentece? the Akron Effect refers to:

1. the reason that traders tend to hold on to losing investments longer than winning ones

2. the tendency to procrastinate in making painful decisions, hoping that the situation resloves itself.

3. the fiery crash of a zeppelin drigible

4. one reason why trying to play the stock market is for suckers.

2. Suppose the spot rate of exchange between Germany and the U.S. is euro 0.91/$, with an expected future spot rate of euro 0.95/$. Expected inflation in Germany is 2%, while U.S. expected inflation is 3%. In this situation, traders expect the __________ to appreciate and __________.

a. euro; purchasing power parity holds

b. euro; inflation in Germany to increase

c. euro; purchasing power parity is violated

d. dollar; purchasing power parity holds

e. dollar; purchasing power parity is violated

Reference no: EM131339702

Questions Cloud

Company a is considering a merger with company b : Company A is considering a merger with company B. B is publicly traded company and its current beta is 1.25. B has been barely profitable, so it has paid an average of only 15% taxes during the last several years. In addition, it uses little debt, ha..

Modify equipment for special use by the firm : You must evaluate the purchase of a new machine for a company. The based price is $165,000, and it would cost another $45,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after..

Compute the expected average annual rate of return : Compute the expected average annual rate of return of the following investment opportunity that is available to you: The potential pay-off is 15% of your original investment in one year, but there is a 10% likelihood that you’ll make no return at all..

Real net average annual rate of return on investment : Mary purchased 100 shares of XYZ Corp. stock for $20 per share and sold this same stock 367 days later for $28 per share. She paid commission of $80 when she purchased the stock and $100 when she sold the stock. What was Mary’s real net average annua..

The akron effect refers to : Suppose the spot rate of exchange between Germany and the U.S. is euro 0.91/$, with an expected future spot rate of euro 0.95/$. Expected inflation in Germany is 2%, while U.S. expected inflation is 3%. In this situation, traders expect the _________..

What is the expected rate of inflation : Suppose that the nominal risk-free rate of return in the U.S is 8% and inflation is expected to be at 7%. In Australia the nominal interest rate is 14%. What is the expected rate of inflation in Australia if the Fisher Effect holds? Assume a firm has..

What is the discounted payback period if the discount rate : An investment project costs $10,000 and has annual cash flows of $2,960 for six years. What is the discounted payback period if the discount rate is zero percent? Discounted payback period years What is the discounted payback period if the discount r..

Forward contract to hedge against exchange rate risk : What is an advantage of using a forward contract to hedge against exchange rate risk?

Roles does finance play in long-term planning : Which of the following roles does finance play in long-term planning?

User Account

All Pages