Suppose that Intel is considering building a new chip-making factory. Assuming that Intel needs to borrow money in the bond market, an increase in interest rates makes it more factory. likely that Intel will build the new True or False: If Intel has enough of its own funds to build the new factory without borrowing, an increase in interest rates would not affect Intel's decision about whether to build the factory. O True O False
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- When nominal interest rates have hit the zero lower bound, can central banks affect the interest rates? Select one: OA. Yes: since the zero lower bound applies to nominal rates, not real rates, and it is real rates that are relevant for investment decisions. OB. No: once the zero lower bound is hit, central banks can no longer employ interest rates to stimulate economic activity. OC. Yes, but the mechanism by which central banks manipulate the interest rates that matter for spending must deviate from the banks' traditional method. OD. A and C.Assume we are a world that is not frictionless. Indeed, the real world is such a place. In this world, a firm may have difficulty raising funds to fund a positive NPV project because too much of the project's payoff would go to investors other than the investors from whom you are trying to raise the new money. Group of answer choices True FalseThe company is considering hedging its copper production. It thinks that prices are highly likely to rise in the near future, it should a buy itm puts b buy otm puts c sell otm calls d do nothing
- If we hold all other factors the same, an increase in interest rates will: a. Decrease the present value of a stream of constant payments we expect to receive. b. Increase the present value of a stream of constant payments we expect to receive. c. Decrease the interest revenue that a company will earn on its funds that it holds in its interest-bearing checking account. d. No impact on how much a company should be willing to pay for factory equipment that is expected to significantly reduce the factory electricity costs.Suppose Hungry Whale Electronics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $400,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $325,000 Year 2 $475,000 Year 3 $475,000 Year 4 $450,000 Hungry Whale Electronics's weighted average cost of capital is 9%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value (NPV)? $1,131,073 $983,542 $1,458,542 $1,433,542Financial advisors generally recommend that their clients allocate more to higher risk–return asset classes (like equities) if their investment horizons are long. Is this advice consistent with the basic M-V model? Does adding a shortfall constraint to the M-V model make a difference? If so, how? If not, why not? Assuming investment opportunities change over time, what type of asset return behavior would justify this advice within the M-V framework?
- Question 6 a. What are the shortcomings of the internal rate of return criterion? How do you make an investment decision based on the IRR? How would the NPV of the same project look? b. An electric car manufacturer worries that the price of the Lithium-ion battery might increase in the future, which would make it more expensive to produce cars. Discuss at least two strategies you can use to hedge the firm's exposure to rising battery prices. c. Explain the difference between unique risk and systematic riskVerizon has spent billions of dollars to upgrade its network from 3G to 4G. But there aren't many 4G compatible devices, coverage is spotty, and most applications don't really need higher speeds. Verizon is hoping that its investment in 4G works out. Based on the potentially slow initial adoption of 4G by customers, how might the conclusions of a cash payback analysis of Verizon's 4G investment differ from a present value analysis?Please provide step by step explaination as I keep getting this question wrong
- which of the following is an example of unsystematic risk? decrease income tax for all company soft tech won a new sales contract increase in inflammation rate deccrease in government bond rateExplains it correctly. Not copy pasteThe only way the investor can get above average profit through investment in different markets by taking advantage of any abnormality when they occur and abnormality can be exploited because there will never be full market efficiency. One more important point that is for most of the investors, a passive, buy-and-hold, long-term strategy is appropriate because capital markets are mostly unpredictable with random movements in price up and down. "and the investment mantra is: - If intrinsic value is more and market price is less buy the security and if it is opposite sell the security Do you think this statement is correct? write your views by giving some examples of different forms.