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Unformatted text preview: The percentage return is $100/$1,000 = 0.10 = 10%. b. 1) Because the treasury must (and will) redeem the bills at par regardless of the state of the economy. 2) Because the firm’s sales, and hence profits, will generally experience the same type of ups and downs as the economy. Repo Men is considered by many investors to be a hedge against both bad times and high inflation, so if the stock market crashes, investors in this stock should do relatively well. Stocks such as Repo Men are thus negatively correlated with (move counter to) the economy....
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This note was uploaded on 04/08/2010 for the course MBA 5000 taught by Professor Kuritzky during the Spring '10 term at Webster.
- Spring '10