During the period 2006 through 2010, housing production in the United States fell from a tate of over 2.27 million housing starts per year to a rate of under 500,000, a decrease of over 80 percent. At the same time, the number of new houscholds slowed to a trickle. Students without a job moved in with their parents, fewer immigrants came to the United States, and more of those already here went home, If there ate fewer households, it is a decline in demand. If fewer new units are built, it is a decline in supply. a. Draw a standard supply and demand diagram which shows the demand for new housing units that are purchased each month, and the supply of new units built and put on the market each month. Assume that the quantity supplied and quantity demanded are equal at 45,000 units and at a price of $200,000. b. On the same diagram show a decline in demand, What would happen if this market behaved like most markets? c. Now suppose that prices did not change immediately. Sellers decided not to adjust price even though demand is below supply. What would happen to the number of homes for sale (the inventory of unsold new homes) if prices stayed the same following the drop in demand?

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

Financial information that is capable of making a difference in a decision is

An investment offers a total return of 18 percent over the coming year. janice yellen thinks the total real return on this investment will be only 14 percent. what does janice believe the inflation rate will be over the next year?