None This question is about microeconomics analysis. Think of it as an answer to the test and answer it in 3-5sentence long paragraph. 11. a) What determines the interest rate? b) What do financial institutions do?c) Explain the meaning of Arbitrage and Present Value.

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Answered: This question is about microeconomics…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 22RQ: Why should a financial investor care about diversification?

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Similar questions

qUESTION 1 Please help me figure out which of the following multiple choice questions are correct. Please tell me which choices are correct and which are wrong
A well-functioning financial system does all of these EXCEPT: a. foster economic growth by directing savings to its most productive use. b. allocate risk among market participants. c. eliminate systematic risk through diversification. d. direct resources from savers to borrowers.
Multiple Choice Questions 3. If the loan portfolio of a bank consists of a five-year, 10 percent annual coupon loan selling at par, what is the market, or economic, value of capital if interest rates increase by 1 percent? Securities (at par) Loans (at par) A. $35 million. B. -$155 million. C. $7 million. D. -$7 million. E. $0. $250 $760 Deposits Capital $975 $35
Yasmeen purchased stock on January 30, 2017. If she wishes to achieve a long-term holding period, what is the first date that she can sell the stock as a long-term gain? a. July 31, 2017 b. July 30, 2017 c. February 1, 2018 d. January 20, 2018 e. January 31, 2018
Which type of financial intermediary provides individual investors with professional management of their money and diversification in order to limit the risk of investing? A. mutual funds B. insurance companies C. hedge funds D. investment banks
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
"Knowing how to secure your financial well-being is one of the most important things you'll ever need in life. You don't have to be a genius to do it. You just need to know a few basics, form a plan, and be ready to stick to it. No matter how much or little money you have, the important thing is to educate yourself about your opportunities. At the SEC [Securities and Exchange Commission], we enforce the laws that determine how investments are offered and sold to you. These laws protect investors, but you need to do your part, too. No one can guarantee that you'll make money from investments you make." Use the excerpt from the SEC's Guide to Saving and Investing to answer the following. Be sure to write in complete sentences. Explain different types of investments and savings accounts and how they help your money grow over time. Describe the importance of government agencies, like the SEC, in protecting your investments.
7. For each of the following, decide whether you agree or disagree and explain your answer: a. Savings and investment are just two words for the same thing. b. When I buy a share of Microsoft stock, I have invested; when I buy a certificate of deposit, I have not. c. Higher interest rates lead to more investment because those investments pay a higher return.
Question 4 What does it mean to be a ‘rational investor’ and how do fintech solutions encourage us to behave ‘rationally’?
A. True or False: Write T if the statement is correct. If it is not, write F, and state your reason briefly. 1. Financial planning applies only to the area of business finance. 2. Financial planning is solely undertaken by the finance unit of an organization. 3. The projected financial statements can be prepared without determining the level of operating expenses. 4. The preparation of financial plan gets more difficult once capital expenditures are included in the projected cost 5. Sales predictions based on previous sales are considered final in making the financial plan. 6. The long-term financial plan need not be congruent to the vision of a business. 7. The vision of the business defines its short-term financial direction. 8. Financial goals are broader than financial objectives 9. The production schedule is prepared ahead of the sales forecast 10. The financial plan is easily prepared and becomes logical if the expected cost and expenses are determined first. 11. Financial…
1. How does a mutual fund lower transactions costs through economies of scale?
Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.80% at a time when inflation is around 1.95%. For the average saver, the real rate of interest on his or her savings is ___%.

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This question is about microeconomics analysis. Think of it as an answer to the test and answer it in 3-5 sentence long paragraph. 11. a) What determines the interest rate? b) What do financial institutions do? c) Explain the meaning of Arbitrage and Present Value.