Explain why if an insurance company’s CFO immunizes thecompany’s balance sheet it will not necessarily remain immunized in
six months time.

Answers

Answer 1

Answer:

If an insurance company’s CFO immunizes the company’s balance sheet it will not necessarily remain immunized in six months time because of the following reasons:

Interest rate changes: If interest rates change over time, the immunization will be broken. When interest rates increase or decrease, it affects the value of the company's investments in securities that are used to immunize the portfolio. As a result, the immunization strategy will have to be modified to account for the new interest rate environment.

Restructuring the bond portfolio: Companies may also choose to sell a portion of their bonds to raise cash for new opportunities, such as growth investments or business acquisitions. As a result, immunization will be lost because there will be more bonds sold than purchased.

This will impact the company's ability to earn income on their investments, which could lead to a decline in the value of the portfolio.

Changes in market conditions: When market conditions change, it can cause fluctuations in interest rates and bond prices. These changes may result in changes in the values of the bonds, causing the immunization to break down.

Inflation: As inflation rises, it will impact the future value of the bond's cash flows. As a result, the bond may no longer be worth as much as the company originally paid for it, which can lead to a break down of immunization.

If an insurance company’s CFO immunizes the company’s balance sheet it will not necessarily remain immunized in six months time because of the above reasons.

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John qualifies for a high-interest car loan. Making a down payment will what:a. increase the cost of a high-interest loan b. increase the interest rate on a high-interest loan c. decrease the interest rate on a high-interest loan d. decrease the cost of a high-interest loan

Miles and Nick each separately apply for and receive loans worth $5,000 apiece. Miles has a very good credit score, so his loan has an APR of 7.75%, compounded monthly. Nick’s credit score is rather low, so his loan has an APR of 13.10% interest, compounded monthly. If both of them repay their loans over a four year period, making equal monthly payments based on their own loan, how much more will Nick have paid than Miles? (Round all dollar values to the nearest cent.) a.$619.68 b.$267.50 c.$1,609.57 d.$1,070.00

Answers

The answer to the question above as to how much more will nick have to pay than miles if nick's loan has an APR of 13.10% and mile's loan has an APR of 7.75 the answer is letter B, $267.50. in calculation the total payment of nick for four years is $5655 that's with the added 13.10% compounded monthly and mile's is $5387.5 with 7.75% compounded monthly.

Answer:

Explanation:

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Recently, it was observed that people have started saving more rather than spending. This has impacted the demand for luxury goods and services. The decline in the demand led to unemployment in the related sectors. What can be a primary solution to reduce the unemployment levels in the country?A.increase the interest rates
B. impose fine for savings
C. force industries to rehire employees
D. reduce the interest rates
E. import goods and services

Answers

(D) Reduce interest rates. Let people save their money. Raising interest rates would only increases the difficulty in saving money, forcing people to clutch their savings even tighter. In a system where people are able to store and save their money more efficiently, then the more money they can afford to spend. This may allow people to continue to purchase luxury goods, because they won't have to sacrifice necessities. With this hypothetical rise in demand, there may also be a rise in employment, which would eventually counteract the problem presented in this question.

Answer:

(D) Reduce interest rates.

Explanation:

A buyer is concerned that new construction a mile away could have a negative environmental impact on the home they are considering purchasing. Can they make the Contract to Buy/Sell contingent on the result of an environmental impact report?

Answers

Answer:

Yes,they can make the contract to buy/sell contingent on the result of an environmental impact report

Explanation:

Being cautious of the welfare of the local community is an example of ethical consideration in business in some countries,while it is a legal and ethical consideration in some other countries, especially the advanced nations of the world.

Little wonders how the cleanup of the contamination caused by BP in 2010 cost the company about $65 billion in restoration and clean up,legal fees as well as settlements paid to affected parties.

Businesses must as point of duty have regard for environmental impact and footprints

Producers/firms are most commonly connected toA. price.
B. supply.
C. demand.
D. opportunity cost.

Answers

Producers/firms are most commonly connected to B.) SUPPLY.

The Law of Supply states that holding all factors equal, the higher the price of the good, the higher the supply. This is to maximize the profit a producer gets in supplying high-priced products.

An income tax hike A. increases potential GDP.

B. increases employment.

C. decreases potential GDP.

D. Both answers A and B are correct.

E. Both answers B and C are correct.

Answers

Answer:

The correct answer is option C.

Explanation:

An increase in income tax will cause the disposable income of the consumers to decline. It will thus reduce consumer spending.

A reduction in the demand for goods and services will cause production to decrease. Firms will need fewer workers to produce output so employment will also decline.

This will further cause the aggregate demand and potential GDP to decline.

Monetary Policy in Flosserland: In Flosserland, the Department of Finance is responsible for monetary policy. Flosserland has had an inflation rate of 25% for many years.Refer to Monetary Policy in Flosserland. Suppose Flosserland has had the same inflation rate for a long time. Which, if either, of the following ideas imply that the unemployment rate in Flosserland would be above the natural rate.

a) both the Classical dichotomy and the long-run Phillips curve
b) the Classical dichotomy, but not the long run Phillips curve
c) the long-run Phillips curve, but not the Classical dichotomy
d) neither the long-run Phillips curve nor the Classical dichotomy

Answers

Answer:

The correct answer is d) neither the long-run Phillips curve nor the Classical dichotomy.

Explanation:

The answer that best suits the situation described is the Phillips curve in the short term but not in the long term.

The Phillips curve starts from the principle that the amount of money circulating (commonly called "money supply") has real effects on the economy in the short term. In this way, an increase in the money supply would have a beneficial effect on aggregate demand, as citizens will spend more when their nominal wages are increased (known as “monetary illusion”) and a more favorable framework for investment and investment will be created. that the prospects of rising prices will improve the expectations of corporate profits. The improvement in aggregate demand would result in greater economic growth, and this in turn in the creation of new jobs. This is how an inverse relationship between inflation and unemployment is established, expressed graphically by a downward curve.

Final answer:

The theory of the long-run Phillips Curve, but not the Classical Dichotomy, might imply that the unemployment rate in Flosserland could be above the natural rate due to persistent high inflation.

Explanation:

The correct answer to this question - which posits what would happen if Flosserland has maintained a long term inflation rate of 25% - is (c): the long-run Phillips curve, but not the Classical dichotomy. This conclusion is drawn from understandings of both the Classical Dichotomy and the long-run Phillips Curve.

The Classical Dichotomy is a theoretical construct that assumes a separation between real and nominal variables in an economy, indicating that changes in the money supply only affect nominal variables and wouldn't directly influence real economic factors like unemployment.

Conversely, the long-run Phillips Curve, is vertical suggesting there's no long-run trade-off between unemployment and inflation. In the long-run, changes in the inflation rate would not lead to a change in unemployment from its natural rate. However, if Flosserland has had a long-term high inflation rate, it's possible that expectations have not adapted and therefore unemployment could be above the natural rate. So only the long-run Phillips curve might suggest higher unemployment, but not the Classical dichotomy.