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2 years ago

Explain the difference between a credit and a debit cards; weighing the pros and cons of both.

1 answer:

7 0

Credit cards allow you to buy goods and services with credit and if you go over the credit limit you’ll be charged an overdraft fee but with debit cards you can connect the money you earn from your job to the card and spin the money on the card but when the money is gone you have to wait till next paycheck to spend more but they will not be an overdraft fee also credit cards can affect your ability to be approved for loans and pay house mortgages if your credit score is bad meaning you don’t have a good history of paying your bills on time it will make it hard for you to apply for car loans in house mortgages

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Both Bond Bill and Bond Ted have 5.8 percent coupons, make semiannual payments,

viva [34]

Answer:

Percentage change in Bill Price = (91.8486 - 100) / 100 = -0.0815 or -8.15%

Percentage change in Bill Price = (78.1448 - 100) / 100 = -0.2186 or -21.86%

Percentage change in Bill Price = (109.0298 - 100) / 100 = 0.0903 or 9.03%

Percentage change in Bill Price = (132.0946 - 100) / 100 = 0.3209 or 32.09%

Explanation:

To calculate the percentage change in the price of both the bonds, we assume that the par value of both the bonds is $100 each.

To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,

Coupon Payment (C) both Bill and Ted = 100 * 0.058 * 6/12 = $2.9

Total periods (n) - Bill= 5 * 2 = 10

Total periods (n) - Ted= 25 * 2 = 50

As the bonds were previously price at par, the YTM or market interest rate would have been same as the coupon rate. Thus, the old market interest rate was 5.8%. Now as the interest rates have risen by 2% new interest rate will be = 5.8 + 2 = 7.8%

New r or YTM - both Bill and Ted = 7.8% * 6/12 = 3.9% or 0.039

The formula to calculate the price of the bonds today is attached.

Bond Price - Bill = 2.9 * [( 1 - (1+0.039)^-10) / 0.039] + 100 / (1+0.039)^10

Bond Price - Bill = $91.8486

Percentage change in Bill Price = (91.8486 - 100) / 100 = -0.0815 or -8.15%

Bond Price - Ted = 2.9 * [( 1 - (1+0.039)^-50) / 0.039] + 100 / (1+0.039)^50

Bond Price - Ted = $78.1448

Percentage change in Bill Price = (78.1448 - 100) / 100 = -0.2186 or -21.86%

As the bonds were previously price at par, the YTM or market interest rate would have been same as the coupon rate. Thus, the old market interest rate was 5.8%. Now as the interest rates have fallen by 2% new interest rate will be = 5.8 - 2 = 3.8%

New r or YTM - both Bill and Ted = 3.8% * 6/12 = 1.9% or 0.019

The formula to calculate the price of the bonds today is attached.

Bond Price - Bill = 2.9 * [( 1 - (1+0.019)^-10) / 0.019] + 100 / (1+0.019)^10

Bond Price - Bill = $109.0298

Percentage change in Bill Price = (109.0298 - 100) / 100 = 0.0903 or 9.03%

Bond Price - Ted = 2.9 * [( 1 - (1+0.019)^-50) / 0.019] + 100 / (1+0.019)^50

Bond Price - Ted = $132.0946

Percentage change in Bill Price = (132.0946 - 100) / 100 = 0.3209 or 32.09%

5 0

3 years ago

J Corp. common stock is priced at $36.50 per share. The company just paid its $0.50 quarterly dividend. Interest rates are 6.0%.

viva [34]

Answer:

Explanation:

The time (T) = 6 months = 6/12 years = 0.5 years

Interest rate (r) = 6% = 0.06

The stock is priced [S(0)] = $36.50

The price the stock sells at 6 months ( $V_c$ ) = $3.20

European call (K) = $35

The price (P) is given by:

$P=V_c+K.e^{-rT}-S(0)+Dividends\\But, Dividends = 0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Therefore, P=V_c+K.e^{-rT}-S(0)+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Substituting:\\P=3.2+35*e^{-0.06*0.5}-36.5+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\P=3.2+33.9656-36.5+0.4926+0.4852\\P=1.64$

The price of a 6-month, $35.00 strike put option is $1.65

5 0

3 years ago

Under which tab and group can you find the control to add a section to a presentation?

Tpy6a [65]

Answer: the answer is B

6 0

3 years ago

Read 2 more answers

Savvy consumers often purchase automobiles from dealerships at the end of the quarter or at year-end since dealers who meet thei

leonid [27]

Answer:

cumulative quantity discounts

Explanation:

Many customer’s purchase items and commodities at the end of the seasons because at year-end, the sellers, manufacturers and dealers offer various discounts to clear the inventory. Likewise, customers of savvy often buy commodities at the end of a quarter or a season to earn cumulative quantity discounts; it is a discount that is given to consumers who buy a specific amount of quality.

8 0

3 years ago

Martha and Oleg are competitors in a local market and each is trying to decide if it is worthwhile to advertise. If both of them

ad-work [718]

Answer: Martha does not have a dominant strategy

Explanation:

A dominant strategy is one that a player can embark on and get the highest payoff regardless of the actions of their competitor.

In this scenario, there is no strategy that Martha can embark on that would provide the greatest payout regardless of Oleg's decision. If Martha advertises, Oleg makes the same amount advertising as well. If Martha does not advertise, Oleg would decide not to advertise as well and make the same amount.

Martha therefore has no dominant strategy as Oleg would make the same amount regardless of which decision is taken.

5 0

3 years ago