Answer: less than the coupon
Explanation:
When a bond that is bought at a premium of 205 is called before the bond matures by the issuer, this implies that the accelerated premium loss will have to be reflected in calculated yield to maturity.
It should also be noted that the YTC is the lowest among the yields for the premium bonds. Therefore, if the issuer calls the bond before maturity, the yield to call (YTC) realized by the investor would be less than the coupon.
Option B is correct.
Answer: $80
Explanation:
Since the fixed costs are $180,000 and variable costs are $540,000, then the total cost will be:
= Fixed cost + Variable cost
= $180000 + 540000
= $720000
Since there are 9000 units, then the unit sales price will be:
= $720000 / 9000
= $80
The unit sales price is $80
Answer:
The company or government goes into debt to those who purchase the bonds.( B.)
Answer:
No option is correct.
- a. An increase in the tax rate always increases tax revenue. ⇒ FALSE, if tax rates increase beyond the optimal level, instead of increasing total revenue they will decrease it.
- b. The tax rate is 1 percent, and tax revenue is very high. ⇒ FALSE, very low tax rates will result in very low government revenue.
- c. The tax rate is 99 percent, and tax revenue is very high. ⇒ FALSE, very high tax rates will result in very low government revenue.
- d. A decrease in the tax rate always increases tax revenue. ⇒ FALSE, if tax rates decrease beyond the optimal level, instead of increasing total revenue they will decrease it.
Explanation:
According to Arthur Laffer, a direct and sometimes inverse relationship exists between tax rates and government revenue. Sometimes a lower tax rate can result in higher government revenue. But that is not always the case. Sometimes an increase in the tax rate can increase government revenue. The optimal tax rate (T*) is equal to the tax rate that will allow the government to collect the highest amount of revenue. Any lower or higher tax rate will decrease government revenue.