Digital signaling usually means that the information being
conveyed is binary.
Indicate whether the statement is true or false
T
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The economist Irving Fisher, after whom the Fisher effect is named, explained why interest rates ________ as the expected rate of inflation ________
A) rise; increases B) rise; stabilizes C) rise; decreases D) fall; increases E) fall; stabilizes
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A futures price is currently 40 cents. It is expected to move up to 44 cents or down to 34 cents in the next six months. The risk-free interest rate is 6%. What is the probability of an up movement in a risk-neutral world?
A. 0.4 B. 0.5 C. 0.72 D. 0.6
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