management question 24 Moving to another question will save this response. Match
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management question 24
Moving to another question will save this response. Match the following definitions to examples. You just got paid dollar 1, 000. You can either buy a new iPad today or start saving for a car you are going to buy in 1 year 5 years ago, the price a bottle of water was 20 cents, today one bottle costs 23 cents. Economy has grown. You have two options you consider. One option will yield dollar 500 in 1 year. Second option will yield dollar 450 in 1 year. You need to invest dollar 75 in option 1 and dollar 50 in option 2. Your firm decides to issue bonds, because today it is cheaper to issue bonds than ask a bank for a loan. You have two portfolios to analyze. One has a high return with a high risk. The other one has a low risk, but the return is also quite low. Production opportunities Time preferences for consumption Risk Inflation The cost of moneyExplanation / Answer
Production Opportunities : Your firm decides to issue bonds, because it is cheaper to issue bonds than ask for a bank loan.
Time Preferences for Consumption : You just got paid $1000. You can either buy a new iPad today or start saving for a car you are going to buy in 1 year.
Risk : You have two porfolios to analyze. One has a high return with a high risk. The other one has a low risk, but the return is also quite low.
Inflation : 5 years ago, the price of a bottle of water was 20 cents, today one bottle costs 23 cents . Economy has grown.
The cost of money : You have two options to consider. One option will yield $500 in 1 Year. Second option will yield $450 in 1 Year. You need to invest $ 75 in option 1 and $50 in option 2
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