Interest rates affect corporate profits and security prices. based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which is false. o a decrease in the interest rate paid by a business borrower will increase the likelihood that the firm will be able to repay its interest and principal on its debt securities or pay dividends on its equity securities. o there is a positive, or direct, relationship between a firm’s profits and the interest rate paid on the firm’s debt securities. o when investors desire higher returns on their investment, they will decrease the price that they are willing to pay to acquire securities. o because the value of a security is a function of the security’s expected future cash flows and the return required by investors, an increase in investors’ returns will decrease the present value and market price of securities, all other considerations remaining constant.

There is a cost associated with each source of financing. discuss the cost of debt, preferred stock, common stock, and retained earnings in detail. which source of financing is typically less expensive? why? why do financial managers try to determine the optimal capital mix? be specific.

Which of the following is a problem for the production of public goods?

Profits from using currency options and futures.on july 2, the two-month futures rate of the mexican peso contained a 2 percent discount (unannualized). there was a call option on pesos with an exercise price that was equal to the spot rate. there was also a put option on pesos with an exercise price equal to the spot rate. the premium on each of these options was 3 percent of the spot rate at that time. on september 2, the option expired. go to the oanda.com website (or any site that has foreign exchange rate quotations) and determine the direct quote of the mexican peso. you exercised the option on this date if it was feasible to do so. a. what was your net profit per unit if you had purchased the call option? b. what was your net profit per unit if you had purchased the put option? c. what was your net profit per unit if you had purchased a futures contract on july 2 that had a settlement date of september 2? d. what was your net profit per unit if you sold a futures contract on july 2 that had a settlement date of september 2