This theory assumes that the driver of interest rates are the savings and investment flows. A• Interest rate theory B• Market theory C• Biased expectation theory D• Market Segmentation theory

Q: Question: Market Value 1. What kinds of liabilities are there in the market to be purchased?

A: Market value is a crucial concept in the realm of finance and economics, representing the current…

Q: What is the two-step process can which performs deflation and discounting in market interest rate?

A: The two-step process which performs deflation and discounting is that it makes the cash flows…

Q: . What is the term structure of interest rates?

A: Answer: The term interest rate structure is the pattern of necessary returns, also referred to as…

Q: What are the assumptions of efficient market hypothesis? Discuss.

A: The efficient market hypothesis (EMH) is a hypothesis theory which states that share prices reflect…

Q: Which theory of the term structure proposes that bonds of different maturities are not substitutes…

A: Holding money in the form of cash has the benefits of providing liquidity and meeting transactional…

Q: o calculate the Internal Rate of Return, you need to know what interest rate to start with. True or…

A: Internal rate of return (IRR) is the rate at which NPV is zero

Q: How do risk and inflation impact interest rates in the economy?

A: Introduction: The inflation needs to be adjusted in the interest rate of mortgage payments. Due to…

Q: What is the difference between the stated interest rate and the market interest rate?

A: Bonds PayableBonds payable are referred to long-term debts of the business, issued to various…

Q: Identify some macroeconomic factors that influence interest rates and explain theeffects of each.

A: Following are the macroeconomic factors that influence interest rates: GDP An ascent in GDP will…

Q: Charecteristics Model approach IN FINANCE, can be used in determining the discount rate in equity…

A: The discount rate in the equity valuation describes the returns in the long term given as a…

Q: According to the ,long-term interest rates are a function of expected short-term interest rates…

A: Essentially, the term structure of interest rates is the correlation between asset yields or…

Q: How does risk affect interest rates?

A: The risk and the interest rates are in a direct relationship that is, the greater the risk the…

Q: What is interest rate parity?

A: Interest rate parity: Interest rate parity is a theory concerning the association among spot…