1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
vfiekz [6]
3 years ago
10

When the interest rate in the economy was 10 percent, the price of a bond with no expiration date that paid a fixed annual inter

est of $500 was $5,000. If the interest rate in the economy falls to 6 percent, the price of this bond will be about
a. $4,700.
b. $5,030.
c. $7128
d. $8,333.
Business
1 answer:
Nina [5.8K]3 years ago
7 0

Answer:

Option D $8333

Explanation:

The value of the irredeemable bond can calculated using the Dividend Valuation Model.

The formula for the computation is:

Value of the Bond = Interest paid / rate of return on a similar bond

Value of the Bond = $500 / 6% = $8333.33

Note that initially the bond was worth $5000 which can be calculated with the same formula:

Value of the Bond = $500 / 10% = $5000

The net increase is $3333

So the correct answer is option D.

You might be interested in
What is the basis for economics
loris [4]
One basis for economics are science of choice.
7 0
3 years ago
Are sources of revenue for both federal and state governments. Individuals pay this tax from the money they
marusya05 [52]

Answer:

Personal income taxes

Explanation:

Personal income tax is imposed on salaries, wages, interests, and other income an individual earns throughout the year. The government of the country that the person earned their income imposes the tax. Income tax is levied on the income generated by a person or a business in a country.

Income tax is the most important source of revenue for governments. In almost all countries, the tax agencies employ a progressive system of determining the tax amount for each individual. A person with a high income pays higher taxes compared to the one with moderate earnings.

8 0
3 years ago
What should the driver do if he sees a steady yellow x over the lane that he driving in
Fed [463]
He would slow down yelliw mean slow down red is stop and green is go so he would slow down
4 0
3 years ago
How did the k-abc differ from the stanford-binet and wechsler tests?
Paraphin [41]
The K-ABC is different from the wechsler test and  stanford-binet because it was designed to measure several distinct aspects of intelligence. The K-ABC test is just designed to measure several distinct aspects of intelligence of human or students who are taking the test. So the answer in this question is, it was designed to measure several distinct aspects of intelligence.
3 0
3 years ago
Mutual funds allow the common investor without much initial capital to be able to a strategy not easily employable among stocks
Fed [463]

Answer:

diversify  

Explanation:

A mutual fund refers to the professionally managed investment group that funnels money for the acquisition of financial instruments from several investors.

Relative to direct investment in individual financial instruments, mutual funds have pros and cons. The main benefits of mutual funds are providing efficiencies, a better level of diversification, providing liquidity, and being proceeded by institutional investors. On the down side, the creditors will pay different costs and expenses in such a mutual fund.

Mutual funds ' main types comprise open-ended securities, investment vehicles with groups, and closed-end assets. Exchange-traded funds (ETFs) are open-end securities or funds with investment groups listed on markets. Many close-ended securities often mimic exchange-traded funds, as they can be exchanged on stock markets in order to enhance liquidity.

3 0
3 years ago
Other questions:
  • When a corporation has both common stock and preferred stock outstanding:
    8·1 answer
  • Karen bought a mixer. She received a warranty that covers only certain aspects of the product. If the product fails, she may be
    8·2 answers
  • High-income families spend approximately _______ to raise a child.
    5·1 answer
  • The two stocks in your portfolio, X and Y, have independent returns, so the correlation between them, rXY is zero. Your portfoli
    10·1 answer
  • Lucia and Kenji need to decide which one of them will take time off from work to complete the rather urgent task of shearing the
    9·1 answer
  • Norbury Corporation's net income last year was $27,000. The company did not sell or retire any property, plant, and equipment la
    9·1 answer
  • WGU can enroll 325 students monthly. However, due to the ratio of availability of enrollment counselors and potential students t
    12·1 answer
  • On April 1, Sheffield Corp. purchased for $1647000 a tract of land on which a warehouse and office building was located. The fol
    12·1 answer
  • Determine the inventory cost using the (a) first-in, first-out (FIFO) method; (b) last-in, first-out (LIFO) method; and (c) weig
    5·1 answer
  • When the opportunity cost associated with increasing the production of one good or service in terms of another is constant at ev
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!