Today two economies have the same size (e.g., $1B). The growth rate for the first one is 3% and for the second, 6%. How many times the second economy will be larger than the first in 100 years? 17.65, 2, 10.32, 6.89

Q: Suppose that $1000 is invested now, $2000 is invest two years from now, and $3000 is invested four…

A: Calculate the future value as follows:

Q: Revenue from a project is expected to be $7000 per year in real terms (i.e. an identical project…

A: Real Value (P) = $7,000Inflation rate (r) = 2.4% or 0.024Number of years (n) = 8

Q: How much is the sum of the present value of the expected return over those periods

A: Cash Flows (Year 1-10) (CF) =  $15,000 per year Annual interest rate (r) = 5% Time Period (t) = 10…

Q: You observe the following market for European Call and Put options on the S&P 500 ETF: Today Spot…

A: A contract that allows its buyer to trade the underlying on a future date at a pre-specified price…

Q: 10.  A project is predicted to make an NPV of £24m in a boom, £16m in a medium growth economy and…

A: ANSWER THE CORRECT OPTION IS A)£10m THE EXPECTED NPV IS A)£10m COMPUTATION OF EXPECTED NPV   NPV…

Q: For each growth rate below, (i) use the rule of 70 to calculate how long it will take incomes to…

A: The rule of 70 is the method of financial management that helps the investors to know the period in…

Q: 1. Suppose the consumption function is C = $400 billion + 0.8Y and the government wants to stimulate…

A: Solution: Suppose the consumption function is C = $400 billion + 0.8y and therefore the government…

Q: population of a country was approximater million. Use the exponential growth model A = Aet, in which…

A: The growth in the population do not follow any patterns but for simplicity it is assumed that growth…

Q: What will be the approximate population of the United States, if its current population of 280…

A: To calculate the population after 25 years we will use the below mentioned formula   Population…

Q: How many years will it take for $20,000 to grow to $250,000, given a 12% compound growth rate?

A: The objective of this question is to find out the number of years it will take for an initial…

Q: In 10 years from now, how many future dollars will have the same buying power as $24,000 today? The…

A: Future value refers to the value of annuity at future date. It is the value determined when…

Q: 4) A project is predicted to have a return of -£16m in a recession, and the probability of a…

A: Expected Return - It is the return based on certain probability with possible outcome. It can be…

Q: 7. How many years would it take for money to triple in value at 20% per yea simple interest?

A: Let the principal be x And the amount be 3x Simple interest=Amount-principal…

Q: 4. An investment has a doubling time of 24 years. What is the annual growth rate? a. b. What is the…

A: Future value is double of current valuePeriod of double=24 years

Q: What would the future value of $100 be after 5 years at 12% compound interest? A company’s 2005…

A: Step 1: Future value of $100 after 5 years at 12% compound interestStep 2: Sales Growth from 200…

Q: Scenarios: You work in the macroeconomic research department of an investment bank. Based on your…

A: A straddle is a strategy that involves buying a call option and a put option with the same strike…

Q: hat the Duration of Assets (DA) is 5 years and the duration of liabilities (DL) is 3 years. The…

A: Duration of security tells us that how much will be change in value of security with change in…

Q: The firm invests $5 million in a one-year project today. There is a single cashflow at time 1.  The…

A: Given: Investment = $5 million 60% chances of realizing cash flows $9 million 40% chances of…

Q: You have invested $10,000 in this ETF at the beginning of year 2020 and its year-end value was…

A: Rate of return refers to the return earned on an investment or asset over a fixed period of time.…

Q: Scenarios: You work in the macroeconomic research department of an investment bank. Based on your…

A: A bear spread strategy is a strategy in which an investor sells a higher strike price put option and…

Q: If the required reserve ratio is 15%, currency in circulation is $400 Billion, checkable deposists…

A: The money multiplier refers to the changes which can be affected the value of money deposits up to…

Q: The international monetary fund is trying to raise $700 billion in 9 years. At 12% interest…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: Compute the payoff and net payoff of a bear spread strategy built with put options in the three…

A: Put option gives the right but not the obligation to sell at the strike price.  In a bear spread…

Q: Scenarios: You work in the macroeconomic research department of an investment bank. Based on your…

A: An option is a type of financial instrument that is based on the value of underlying securities,…