Explain the expectations hypothesis and its ability to accurately forecast interest rates
What will be an ideal response?
The expectations hypothesis is a generally held belief that the implied forward rate equals the spot rate of interest that will occur in the future. Since risk premiums exist, this forecast is biased and usually does not accurately predict interest rates.
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A lessee wants to lease an asset on a long-term noncancelable basis, but wants to avoid capitalizing the lease. The lessee is considering the following strategies to accomplish its objective: 1 . Use a lessee guarantee of residual value. 2 . Make it impossible for the lessee (which has a very low borrowing rate) to determine the lessor's implicit rate, which is much higher the lessee's borrowing
rate. 3 . Include a bargain purchase option in the lease agreement. 4 . Include a transfer of title in the lease agreement. Which of the strategies above will provide the desired result? a. only 2 b. 1 and 3 c. 1 and 4 d. None
Random samples of size 17 are taken from a population that has 200 elements, a mean of 36, and a standard deviation of 8. Which of the following best describes the form of the sampling distribution of the sample mean for this situation?
A. Approximately normal because the sample size is small relative to the population size B. Approximately normal because of the central limit theorem C. Exactly normal D. None of these alternatives is correct.
Which of the following is true regarding drug testing of public and private employees by employers?
a. There are greater limits on drug testing in relation to public employees as compared to private employees because public employees have rights under the U.S. Constitution. b. There are greater limits on drug testing in relation to public employees as compared to private employees because private employees have rights under the U.S. Constitution. c. The limits on drug testing are the same in relation to public and private employees because both categories of employees have rights under the U.S. Constitution. d. There are no U.S. Constitutional limits on drug testing in relation to either public or private employees because neither category has rights under the U.S. Constitution.
A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin, which can be used effectively as a blood replacement. The manufacturer of the product has put a high price on the product in order to recoup its research and development costs. The manufacturer of Oxyglobin is using a _____ policy.
A. price-banding B. penetration pricing C. price-lining D. bundling costs E. price-skimming