1 security prices in the financial markets fluctuate daily, Ask an Expert

Finance

1. Security prices in the financial markets fluctuate daily because they:

A. are inefficient.

B. are slowly reacting to new information.

C. are continually reacting to new information.

D. are over reacting to new information.

E. only reflect historical information.

2. Alice can get a one-year loan at 5% at her bank, while no bank is willing to give Brad a one-year loan for less than 10%. Brad has just had surgery, and must pay the hospital $10,000 immediately, but he has no money today, though he will have money in one year. So Alice oï¬€ers Brad a proposal: she will borrow $10,000 from her bank for one year on her own account, and Brad will repay this loan. In addition, he will pay Alice a sum of money today. What is the maximum amount that Brad should be willing to pay Alice up-front under this arrangement? Alice is not willing to consider borrowing more than $10,000. (2pts)

(a) $454.54 (b) $377.18 (c) $476.19 (d) $500

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92768897

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