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1 year ago

Differentiate between a bond coupon rate and the market rate of interest.

Business

1 answer:

Arlecino [84]1 year ago

5 0

The differences between a bond coupon rate and the market rate of interest are:

A coupon rate is a fixed rate of return attached to the face value of the bond paid to the purchaser from the seller, while the market interest rate can change dramatically throughout the lifespan of the bond.

The coupon rate is calculated on the face value of the bond, which is being invested. The interest rate is calculated considering the basis of the riskiness of lending the amount to the borrower. The coupon rate is decided by the issuer of the bonds to the purchaser. The interest rate is decided by the lender.

A bond is a debt security, similar to an IOU. debtors problem bonds to raise money from investors inclined to lend them money for a certain amount of time. while you buy a bond, you are lending to the provider, which may be a government, municipality, or enterprise.

Bonds are issued with the aid of governments and agencies after they want to elevate money. by means of shopping for a bond, you are giving the provider a mortgage, and they agree to pay you again the face fee of the loan on a particular date and to pay you periodic interest payments along the way, generally two times a year.

Learn more about bond here: brainly.com/question/25965295

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Big Dom’s Pawn Shop charges an interest rate of 27.5 percent per month on loans to its customers. Like all lenders, Big Dom must

lidiya [134]

Answer:

APR is 330% and EAR is 1745.53%

Explanation:

Given:

Monthly interest rate = 27.5%

APR or annual percentage rate = 27.5×12 = 330%

So, Big Dom should report an APR of 330% to customers.

EAR or effective annual rate = $(1+\frac{APR}{m}) ^{m}-1$

Here,

APR is 330% and m is 12

330÷12 = 27.5%

substituting the value in the above formula:

EAR = $1.275^{12}-1$

= 17.4553 or 1745.53%

3 0

2 years ago

4: In 2013, the United States Postal Service charged $0.46 to mail a letter weighing up to 1 oz. and $0.20 per ounce for each ad

Gekata [30.6K]

Answer:

The function that would determine the cost in dollars, c(z), of mailing a letter weighing z ounces is (0.46 + 0.20z)

Explanation:

Weight of the letter = z ounces (z is an integer greater than 1)

cost to mail a letter weighing 1 ounce = $0.46

cost to mail an additional ounce = $0.20

cost to mail z additional ounces = z × $0.20 = $0.20z

Total cost of mailing a letter weighing z ounces = $0.46 + $0.20z

Therefore, cost function, c(z) = 0.46 + 0.2z

6 0

3 years ago

Read 2 more answers

Glascro Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the

Ber [7]

Answer:

$1,000

Explanation:

We know that

Total cost = Fixed cost + Variable cost

From the data given, we can calculate the variable cost using the high-low technique.

Variable cost per unit

= $\frac{Total cost at highest level-Total cost at lowest level }{Highest level - Lowest level} \\\\=\frac{16,000-10,000}{1,000-600 } \\$

=$15

Lease cost = FC + $15(Machine hours)

Lease cost -$15(Machine hours) = FC

Case,

i) 800 machine hours,

FC = Lease cost - $15(Machine hours)

= $16,000 -$15(1000) = $1,000

6 0

3 years ago

Falcon Co. produces a single product. Its normal selling price is $29 per unit. The variable costs are $15 per unit. Fixed costs

Elan Coil [88]

Answer:

$11,760

Explanation:

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income/profit.

Without the new offer

Profit = 5000($29 - $15) - $20,900

= $70,000 - $20,900

= $49,100

For the new order a variable selling cost of $2 per unit would be eliminated, the contribution of the order will be

= 1680($20 - $15 + $2)

= 1680 * $7

= $11,760

This is the differential effect on profit.

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3 years ago

When Elle's Espresso Bar raised its price by 10 percent, the quantity of coffee that Elle sold decreased by 40 percent. When E

victus00 [196]

Answer: Elle's coffee has lots of close substitutes while coffee has few substitutes, so the demand for Elle's coffee is more elastic than the market demand for coffee.

Here, it can be seen that when Elle's Espresso Bar raised its price by 10 percent, the quantity of coffee that Elle sold decreased by 40 percent, whereas when Elle and all her competitors cut their prices by 10 percent, the quantity of coffee sold by Elle increased by only 4 percent.

∴ The demand for Elle's coffee is more elastic than the market demand for coffee.

7 0

3 years ago

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