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2 years ago

A certificate of deposit pays a higher interest rate than a savings account because the money is quizlet

1 answer:

6 0

A certificate of deposit pays a higher interest rate than a savings account because the money is kept by banks for a longer time period.

What is the difference between a CD and a savings account?

Since CDs are term deposits, money is held in escrow for a predetermined period. Term deposits are distinct from savings accounts. Savings accounts can be topped off with the money, but once a CD is opened, it usually isn't possible.

Is a CD better than a high-yield savings account?

A high-yield savings account gives far higher liquidity if you want to use the funds as an emergency fund. With a CD, you cannot withdraw your money before it matures without paying a significant penalty. If you have to make an early withdrawal, you might have to pay interest for several months.

Learn more about certificate of deposit: brainly.com/question/13332611

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To reduce the effects of crowding out caused by an increase in government expenditures, the Federal Reserve could

Alexxandr [17]

Answer:

D) Increase the money supply by buying government securities

Explanation:

When public investment crowds out private investment, it is because the government is making use of all, or most of the supply of loanable funds in the economy. This causes the interest rates to rise, making it more expensive for the private sector to borrow and invest.

The Central Bank can step in and help solve this problem by lowering the interest rate. It can do so by buying government securities. The money used to buy these securities enters the economy, making the money supply grow, including the supply of loanable funds, causing the interest rate to fall.

8 0

3 years ago

A 12-year, 5 percent coupon bond pays interest annually. The bond has a face value of $1,000. What is the percentage change in t

Shalnov [3]

Answer:

Percentage change in price = 1.54%

Explanation:

The price of a bond is the present value (PV) of its interest payments and redemption value.

Note that interest payment = Coupon (%) × Face value

<em>The coupon rate is 12% in this question</em>

The redemption value is the amount payable upon maturity of the bond. Here, it is the face value.

So we discount these cash flows- interest payments and face value

Price of the bond at a yield of 6%

Interest rate payment = 6% × 1000 = 60

PV of interest payments = (1 - (1+r)^(-n))/r

r = yield, n = number of years

PV of interest:

60 × (1 - (1+0.06)^(-12))/0.06

= 60 × 8.3838

=$530.30

PV of redemption value = 1000 × (1+0.06)^(-12)

= 496.96

Price of Bond = 530.30 + 496.96 = $1027.26

Price of bond when yield is 5.5%

= 60 × (1 - (1+0.055)^(-12))/0.055

= 60 × 8.6185

=$517.11

PV of redemption value = 1000 × (1+0.055)^(-12)

= 525.98

Price of Bond = 517.11+ 525,98 = $1043.09

Percentage change in price =

=( (1043.09-1027.26)/1027.26) × 100

= 1.54%

8 0

4 years ago

Individuals have the choice whether to save or invest it is not recommended to do both. True or False?

QveST [7]

False.

While it is true that individuals can choose what to do with their money, both saving and investing are smart decisions when done right.

7 0

3 years ago

Read 2 more answers

On May 11, 2012, your calendar year firm pays $6,000 for a used computer server, its only asset purchase for the year, and estim

Effectus [21]

Answer:

Calendar-Year Firm

The firm’s maximum 2012 deduction for depreciation is:

= $917.

Explanation:

a) Data and Calculations:

Purchase of a used computer server on May 11, 2012 = $6,000

Since the server is a used one, we assume a four-year useful life

Salvage value = $500

Assumed useful life = 4 years

Depreciable amount = $5,500 ($6,000 - $500)

Since the firm does not take the Section 179 Deduction, which would have allowed it to expense the whole depreciable amount this 2012, the depreciation expense for the first year is calculated as follows:

Annual depreciation expense, using the straight-line method = $1,375

For 2012, the firm's maximum deduction for depreciation will be:

= $917 ($1,375 * 8/12) (covering the months from May 11 to December 31)

4 0

3 years ago

Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisio

ELEN [110]

Answer:

Veronica is wrong because if Percy division is close, it's fixed won't be eliminated and as such the cost will be shouldered by the other divisions which will lead to a $9,400 reduction in profit.

Though eliminating Percy division will prevent the loss of $26,200. However with a fixed cost totalling $35600 which will have to be beared by other five divisions, eliminating Percy division won't be a good idea.

Explanation:

Kindly chech attached picture

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3 years ago