Chapter 14-16 (Homeworks)

Edgar is working part-time. Diane is on temporary layoff. Who is included in the Bureau of Labor Statistics' "employed" category?

only edgar

Yoyo's Frozen Yogurt, Inc. is thinking of building a new warehouse. They believe that this will give them $50,000 of additional revenue at the end of one year, $60,000 additional revenue at the end of two years, and $70,000 in additional revenue at the end of three years. If the interest rate is 5 percent, Yoyo would be willing to pay

$160,000 but not $170,000

cleo promises to pay jacques $1,000 in two years. If the interest rate is 6 percent, how much is this future payment worth today?

$890.00

WAGE / QUANTITY DEMANDED / QUANTITY SUPPLIED $7 / 9,000 / 14,000 $6 / 12,000 / 12,000 $5 / 15,000 / 10,000 If the government imposed a minimum wage of $5, what would unemployment be?

0

A judge requires Harry to make a payment to Sally. The judge says that Harry can pay her either $10,000 today or $11,000 two years from today. Of the following interest rates, which is the lowest one at which Harry would be better off paying $11,000 two years from today?

5 percent

Your financial advisor tells you that if you earn the historical rate of return on a certain mutual fund, then in three years your $20,000 will grow to $23,152.50. What rate of interest does your financial advisor expect you to earn?

5 percent

Greg's Tasty Ice Cream is considering building a new ice cream factory that costs $8.3 million. The company accountants believe that, not accounting for interest costs, building the factory will increase profits by $5 million the first year, $4 million the second year and have no value thereafter. Greg's Tasty Ice Cream should build the factory if the interest rate is

5% but not if it is 6%

You put $75 in the bank one year ago and forgot about it. The bank sends you a notice that you now have $81 in your account. What interest rate did you earn?

8 percent

Fundamental analysis shows that stock in Cedar Valley Furniture Corporation has a price that exceeds its present value.

This stock is overvalued; you shouldn't consider adding it to your portfolio.

who of the following would be included in the Bureau of Labor Statistics' "unemployed" category? a. julie, who is on temporary layoff b. andrew, who worked only 15 hours last week c. ellen, who neither has a job nor is looking for one d. none of the above is correct

a

diversification of a portfolio... (can eliminate ______, but it cannot eliminate ________)

can eliminate firm-specific risk, but it cannot eliminate market risk

Jai Li just lost her job, and she hasn't yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as a. unemployed and in the labor force. b. unemployed, but not in the labor force. c. in the labor force, but not unemployed. d. neither in the labor force nor unemployed.

d

The efficient markets hypothesis says that beating the market consistently is

impossible. Many studies find that beating the market is, at best, extremely difficult.

If a person is risk averse, then as wealth increases, total utility of wealth

increases at a decreasing rate

The value of a stock is based on the

present values of the dividend stream and final price. As a result, the value of a stock falls when interest rates rise.

the field of finance primarily studies

the implications of time and risk for allocating resources over time

The possibility of speculative bubbles in the stock market arises in part because

the value of shares of stock depends not only on the future stream of dividend payments but also on the price at which the stock will be sold

Which of the following methods of picking stocks is not consistent with fundamental analysis?

viewing individual stock prices as unpredictable