Since tax is only applicable over capital gains, therefore once taxes are exempted, yield of the bonds decreases. However studies suggests that dealer arbitrage activities in the market for bonds substantially reduce the impact of taxes on long-maturity taxable bondprices and therefore reduce yields of taxable bonds relative to yields of tax-exempt bonds. However, in this case, the impact of dealer arbitrage activities in the market would not be considered for analysis. Therefore, once the municipal bond gets exempted from tax, its yield decreases, thus the risk premium decreases.
Though, Aaa/AA Municipal Bond has same liquidity and years to maturity as of Aaa/AAA rated, it is possible that aAaa/AA Municipal Bond pay less yield than comparable Treasury that is rated Aaa/AAA because yield of a bond is inverse to its price, therefore, as bond prices increase, bond yields fall. Since price of bond is inversely proportion to yield to maturity, therefore as rate increases price of the bond decreases. Discount rate can be considered as function of risk factors. Since risk associated with Municipal Bonds is higher than that of risk associated with Treasury Bonds having same rating, therefore the price of Municipal Bonds is lower than that of Treasury Bonds, therefore Aaa/AA Municipal Bond pay less yield than comparable Treasury that is rated Aaa/AAA.
No of Shares = 400
Price per share = $566
Total investment = 400 x $566 = $226400
2 call options wrote with Strike price $245, option premium = $320
True. If I have the information that price of the stock going fall from current level, then I will not buy the stock and hold for one year. However, in short run the stock price may increase and one can make money based on that (Technical analysis). Investors can also use derivatives such as put option and gain from the fall in prices.
The main rationale behind such behavior is the fact that all the individuals are rational in nature i.e. they always prefer more than less. It also suggests that at same level of risk, people always seek higher return. In this case, since investors are aware that they will incur higher loss, therefore they will refrain from buying the stocks
Goods Market: C=225 + 1/2(Y-T) I=240-400r G=125
Money Market: Money Supply=490 L(r,y)=(1/2)Y-100r Long-Term Inflation: 2% Natural Rate of Unemployment: 5%
the there is an increased risk of the stock market changing the Money Demand by 25 regardless of Y or r.
Extra Credit: Prior to the Great Recession, which famous economist infamously claimed that the Federal Reserve understood monetary policy so much there would never be another phenomenon such as the Great Depression. Provide documentation—website etc.—of this.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more