Starting to invest early for retirement reduces the benefits of compound interest.
Answer the following statement true (T) or false (F)
False
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Suppose the following version of the APT is a good model of risk in the stock market. There are three factors: (1) the stock market's excess return, in percentage points; (2) the unemployment rate minus its natural rate (the level the unemployment rate would be if the economy were at full employment), in percentage points; and (3) the real federal funds rate minus its long-run equilibrium value. Suppose the natural rate of unemployment is 4.5 percent and the long-run equilibrium value of the real federal funds rate is 3.0 percent. Each of the following stocks has the beta coefficients shown in the table below:
?1i ?2i ?3i Royal Dutch Shell3 ?3 4 Merck2 6 0 Wachovia1 ?3 ?8 a.If your forecast for next year is that the risk-free interest rate next year will be 1.0 percent, the overall stock market will return 10.0 percent, the unemployment rate will be 5.0 percent, and the real federal funds rate will be 2.0 percent, what is the expected return (in percent, with two decimals) to each of the three stocks? Show your calculations. b.If your forecast for next year is that the risk-free interest rate next year will be 2.0 percent, the overall stock market will return 20.0 percent, the unemployment rate will be 4.0 percent, and the real federal funds rate will be 4.0 percent, what is the expected return (in percent, with two decimals) to each of the three stocks? Show your calculations. What will be an ideal response?
For developing countries, import tariffs generally are ______ than tariff levels in advanced countries
a. higher b. lower c. the same as d. less protective
One area of difference between GAAP and IFRS cash flow reporting is the
A) treatment of losses on sale of equipment. B) general categories required for various types of cash flows. C) use of the direct or indirect method of reporting operating cash flows. D) allowed classifications of dividends and interest paid or received.
The principle of lower of cost or market and the potential obsolescence of inventory are a concern for the audit team because of which of the following?
a. They are uncommon and may not exist. b. They are a burden to the auditor in the undue amount of work caused. c. They are likely to occur in the last month of the year and cause cutoff problems. d. They are an inherent component of complexity related to valuation.