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Anvisha [2.4K]
1 year ago
5

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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John was driving his car in a careless way, failing to drive as a reasonably prudent person would under the driving conditions.
Ilia_Sergeevich [38]

Answer:

1. <em>If this law of contributory negligence applies to the state, then Ramona will receive no compensation for the damages she sustained. </em>

<em> </em>2<em>. If this law of comparative negligence applies to this state, then Ramona will get 100% - 20% = 80% of the damages incurred in the accident, from John which will be $80,000</em>

<em />

Explanation:

In contributory negligence, the defense completely bars plaintiffs from any recovery if they contribute to their own injury through their own negligence.

<em>If this law of contributory negligence applies to the state, then Ramona will receive no compensation for the damages she sustained. </em>

<em> </em>

In comparative negligence, the plaintiff's damages is award by the percentage of fault that the fact-finder assigns to the plaintiff for his or her own injury i.e the plaintiff's damage compensation is reduced by percentage of his/her percentage of fault.

<em>If this law of comparative negligence applies to this state, then Ramona will get 100% - 20% = 80% of the damages incurred in the accident, from John</em>

this is 80% of $100,00 which is equal to <em>$80,000</em>

8 0
3 years ago
Your corporation has a marginal tax rate of 35% and has purchased preferred stock in another company. The before-tax dividend yi
Leni [432]

Answer:

5.37%

Explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the company’s after tax return on preferred by using following formula:-

Company’s After Tax Return = Before Tax Dividend Yield Rate on Preferred Stock × [1 - (1 - Dividend Exclusive) × (Tax Rate)]

= 6% × [1 - (1 - 70%) × (35%)]

= 0.06 × [1 - (1 - 0.70) × (0.35)]

= 0.06 × [1 - (0.30) × (0.35)]

= 0.06 × (1 - 0.105)

= 0.0537

= 5.37%

We simply applied the above formula to determine the company after tax return

8 0
2 years ago
Problem 7-28 Nonconstant Growth (LO2) Planned Obsolescence has a product that will be in vogue for 3 years, at which point the f
LuckyWell [14K]

Answer:

Po = <u>D1</u>        +     <u>D2</u>    +        <u> D3</u>

       (1 + Ke)     (1 + Ke)2   (1 + Ke)3                                                                                                                                          

Po = <u>$12</u> +   <u>$12.50</u> +      <u>$28 </u>

     (1 + 0.1)    (1 + 0.1)2   (1 + 0.1)3

Po = <u>$12</u> + <u>$12.50</u> + <u>$28</u>

        1.1       (1.1)2        (1.1)3

Po = $10.91 + $10.33 + $21.04

Po = $42.28  

                                                                                   

Explanation:                                                                      

The current stock price is a function of future dividends capitalised at the cost of capital of the company of 10% for a period of 3 years.  

6 0
3 years ago
Ella has an offer to buy an item with a sticker price of $12,300 by paying $420 a month for 36 months. What interest rate is Ell
pentagon [3]

Answer:

18.65%

Explanation:

Cost = $12,300

Total Payment = $420 × 36

                        = $15,120

Difference in the cost and payment = $15,120 - $12,300 = $2,820

Interest rate is the ratio of the interest to the original cost of the item.

The interest is the difference between the amount paid and the actual cost.

Interest rate = ($2,820/$15,120) × 100%

= 18.65%

5 0
3 years ago
Read 2 more answers
The Lynx Manufacturing Company produces components used in electronic toys. In fiscal year 2017, Lynx earned an accounting profi
Mice21 [21]

Answer:

The correct answer is option B.

Explanation:

In 2017, Lynx earned an accounting profit of $3 million.

Lynx's production facilities might have also been used to produce components for mobile phones, which would have generated $2 million in revenues and saved the company $500,000 in production costs.

The accounting profit involves only explicit costs. While economic profit includes both explicit as well as implicit cost.

Here, the implicit cost is the opportunity cost of producing toys components. Lynx could have earned greater profit if it produced components for mobile phone and also could have saved cost of production.

Economic profit

= accounting profit - implicit cost

= $3 million - ($2 million + $500,000)

= $3 million - $2.5 million

= $500,000

So, Lynx  had an economic profit of $500,000.

6 0
3 years ago
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