SoCal
Hollywood
Yeah, tell em_516 that. I think that University as a whole is easy.
Says he whose signature reads "Uni's gay"SoCal said:Yeah, tell em_516 that. I think that University as a whole is easy.
lol but you CHOSE to do economics..mine is only a minor part of my degree, but compulsory..it can't be THAT easy if so many people are failing it right now! sooooooo can't wait for exams to be over and then economics is GONE!!baker182 said:Macro is fucking easy
Sorry about that, i wote it at like 2am. Yes i understand now.SoCal said:Um, I think you need to read over what you just wrote, it doesn't make sense. Anyway, an upward sloping yield curve means that short-term interest rates are lower than long term interest rates for debt securities in the same risk class. According to the Expectations Theory, interest rates are set such that investors in debt securities can expect, on average, to achieve the same return over any future period, regardless of the term of the security in which they invest (remember the demonstrations in the lecture and in ACFI2070). Therefore, it doesn't matter whether the company raises debt by issuing short-term or long-term debt securities because on average they will still have to pay the same average interest rate per year over the period.
For example (this is overly simplified and does not take into account the compounding but it conveys the message), the company may need to invest for three years. The one year interest rate may be 5% p.a. or the three year interest rate 6% p.a.. The fact that the one year interest rate is 5% and the three year interest rate is 6% means that the market expects the interest rate to rise over the period. So, while the company could borrow at 5% for the first year, the second year they may have to borrow at 6% and the third at 7% (making an average of (5+6+7)/3 = 6% p.a. over the three years, just as the Expectations Theory would predict).
P.S. Do you have an answer to my question?
I am doing that subject next semester I think. I heard it is pretty hard.celcast said:anyone here do ACFI3140 Investments?