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1 year ago

The direct income capitalization model employs …………. time horizon: ________

Business

1 answer:

jekas [21]1 year ago

8 0

The direct income capitalization model employs an infinite time horizon.

<h3><u>What is time horizon?</u></h3>

A time horizon, sometimes referred to as a planning horizon, is a set point in the future where specific activities will be assessed or taken to have concluded.
Assigning such a defined horizon time is important in an accounting, financial, or risk management regime so that alternatives can be assessed for performance over the same time frame.

In the real world, a time horizon is physically impossible. Even though short term horizons like end of day, end of week, and end of month matter in accounting, these horizons are typically used for simple mark to market processes and summing up.

Know more about time horizon with the help of the given link:

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Matt purchased a 20-year par value bond with an annual coupon rate of 8% compounded semiannually for a price of 1722.25. The cou

finlep [7]

Answer:

(b) 1440

Explanation:

As the coupon rate of 8% is greater than the yield to maturity (YTM) of 6% annually, the bond is selling at a premium. Hence, the bond will be called at the earliest i.e. 15 years.

Coupon = Call Price * Semi-annual coupon rate = X * [0.08 / 2] = X * 0.04

Yield to call = 6% annually = 3% semi-annually

Time = 15 years * 2 = 30

We know that,

Current Price of bond = Coupon * [1 - (1 + YTC)-call date] / YTC + Call Price / (1 + YTC)call date

1,722.25 = [X * 0.04] * [1 - (1 + 0.03)-30] / 0.03 + [X / (1 + 0.03)30]

1,722.25 = [X * 0.04] * 19.60 + [X * 0.41]

1,722.25 = X * [(0.04 * 19.60) + 0.41]

1,722.25 = X * 1.194

X = 1,722.25 / 1.194
X=$ 1,442.42 \approx $ 1,440

4 0

3 years ago

Suppose you are trying to understand the effect that an increase in the price of grapes will have on the market for wine.

NemiM [27]

Answer:

The correct answer is option d.

Explanation:

The most effective model to understand the effect of change of a variable on other variable is by assuming other factors to be constant. This simplifies the model and helps in easily understanding the relationship between the two variables.

Though the assumption of other things being constant does not apply in the real world, it is still used as otherwise change in other factors would complicate the model. If several factors change it would be difficult to understand the relationship between variables.

Here, to study the effect of change in the price of grapes on the market for wine, it is necessary to assume other factors such as income, consumer preferences, etc to be constant.

4 0

3 years ago

Who is primarily responsible for the people who own the company stock?

Gnesinka [82]

Answer:

The people who buy the stock

Explanation:

I'm not sure but that's my best guess considering they bought it and would more than likely have to sign a contract of liability.

3 0

3 years ago

Consider the closed (no exports or imports) Latverian economy in which the consumption function is C = 300 + 0.75DI (where DI =

777dan777 [17]

Answer:

0.66

Explanation:

Marginal propensity to consume is the proportion of disposable income that is spent on consumption

Marginal propensity to consume = change in consumption / change in income = C / Y

Gross domestic product (Y) is the sum of all final goods and services produced in an economy within a given period which is usually a year.

In a closed economy, GDP = Consumption + Investment spending + Government Spending

Y = 300 + 0.75(Y - $1,200) + $900 + $1,300

Y = 300 + 0.75Y - $900 + $900 + $1,300

Collect like terms

Y - 0.75Y = $1600

0.25Y = $1600

Y = $6400

Substitute for Y in the consumption function : 300 + 0.75(Y - $1,200)

300 + 0.75($6400 - $1,200)

300 + 0.75($5,200) = $4,200

C = $4200

Marginal propensity to consume = $4,200 / $6400 = 0.66

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3 years ago

What is the organisation for supermarket.!

AURORKA [14]

The organization for supermarket is that you have to keep the food and fruits nice and fresh clean the floors and the whole store which is a lot of work for the workers to do they have to fix every problem there is and have to keep their business

6 0

3 years ago