Answer:D) the bond is probably being called by the issuer because interest rates went up
This statement is not true because when interest rates go up the issuer is at an advantage as he had previously borrowed money at a interest rate which is lower than the present interest rate, as interest rates have risen. Also when interest rates rise and the issuer calls the bond he will have to pay higher interest to re borrow money and this is foolish thus the issuer will not call the bond when interest rates rise. The issuer will call the bond when interest rates fall, as the issuer can re issue the bonds and borrow money at lower interest rates.
Explanation:
Answer:
Determinants of Interest Rates The real risk-free rate is 4%. Inflation is expected to be 4% this year, 5% next year, and then 4.5% thereafter. The maturity risk premium is estimated to be 0.0006 × (t - 1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security?
The nominal interest rate = 8.86%.
Explanation:
Average inflation premium = (4%+5%+4.5%+4.5%+4.5%+4.5%+4.5%)/7 = 31.5%/7 = 4.50%
Maturity risk premium for 7 year bond = 0.0006 * (7-1) = 0.36%
Nominal interest rate = real risk free rate + inflation premium + maturity risk premium = 4% + 4.50% + 0.36% = 8.86%.
Therefore, the nominal interest rate for the question given = 8.86%.
Answer:
Semi-annual interest =$11,700
Explanation:
The semi annual interest = coupon rate × nominal value× 1/2
= 9% × 260,000× 1/2
=$11,700
The interest has to be pro rated into two to account for 6 months
Answer:A product is a tangible item that is put on the market for acquisition, attention, or consumption, while a service is an intangible item, which arises from the output of one or more individuals. ... In most cases services are intangible, but products are not always tangible. difference between them is products are tangible objects that can be seen, felt and can be moved, whereas, services are intangible and cannot be moved. ... Key Features of a Product. The main character of a product is that it is a physical item that is tangible.
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Explanation: