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interest rates

Question

1.      Increases in interest rates reflect likely increases in ______, which is connected to depreciating

_____ rates.

 
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risk-free rate

Question

A stock has an expected return of 10.5 percent, a beta of 1.30, and the return

on the market is 9.20 percent. What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 
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Bond

Question

Both Bond A and Bond B have 9 percent coupons and are priced at par value. Bond A has 5 years to maturity, while

Bond B has 20 years to maturity.

a. If interest rates suddenly rise by 1.6 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

b. If interest rates suddenly fall by 1.6 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 
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A “race-to-the-bottom” process

Question

A “race-to-the-bottom” process may set in as MNEs search for ever-lower-cost locations. Discuss how it relates to

the Bible and analyze? the trade-offs between the positive effects of raising the standard of living in some of the world’s poorest countries with the drawbacks of moving jobs established in one country to another. 

 
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