What type of investment offers both capital gains and interest income?

Nobel laureate Paul Samuelson said that comparative advantage is one of the few ideas in economics that is both "true and not ob

sineoko [7]

Answer:

Explanation:

Absolute advantage refers to the ability to produce the same good or service using fewer inputs than another producer.

Comparative Advantage refers to the ability to produce a good or service at a lower opportunity cost than another producer.

For A.

Mitchell has the absolute advantage in soup.

Kana has the absolute advantage in cleaning.

Mitchell has the comparative advantage in soup.

Kana has the comparative advantage in cleaning.

For B.

Sienna has the absolute advantage in cookies.

Sienna has the absolute advantage in drywall.

Sienna has the comparative advantage in cookies.

Ethan has the comparative advantage in drywall.

For C.

Kara has the absolute advantage in sculptures.

Sara has the absolute advantage in ads.

Kara has the Comparative advantage in sculptures.

Sara has the comparative advantage in ads.

For D.

Data has the absolute advantage in poems.

Data has the Absolute advantage in physics.

Riker Comparative advantage in poems.

Data Comparative advantage in physics.

7 0

3 years ago

Under what scenario could fiscal policy make a recession even worse?

mr Goodwill [35]

Answer:

The correct answer is letter "A": If tax cuts are not evenly distributed across income groups.

Explanation:

Fiscal policy refers to the combined governmental decisions regarding a country's taxing and spending. The term fiscal policy is associated with British economist John Maynard Keynes (1883-1946) who believed governments should influence macroeconomic productivity levels. Though, it could be a trap if it is not allocated correctly among different income groups. Economies such as Brazil, for instance, have allocated higher taxes for low-income people creating economic disparity.

6 0

4 years ago

A corporate bond has 22 years to maturity, a face value of $1,000, a coupon rate of 4.6% and pays interest semiannually. The ann

julia-pushkina [17]

Answer:

a. The answer is: $1,008.40

b. The bond's YTM is 3.343%

c. The current yield is 3.826%

Explanation:

a. Bond price formula: ∑(C* / (1+YTM) $n$ )

The price of the bond Intro A with i=1,2...10 is:

∑($1,000 x 3.4% / (1 + 3.3%) $i$ ) = $1,008.40

b. The price of the corporate bond which has 22 years to maturity is: $1,202.20

Given that the bond is trading at par value, the bond's YTM is:

[Annual Interest Payment + ((Face Value – Current Price) / (Years to Maturity))] / ( ( Face Value + Current Price ) / 2 )

= [$1,000 x 4.6% + (($1,000 - $1,202.20) / 22)] / (($1,000 + $1,202.20) /2)

= 3.343%

c. The bond's current yield is:

Annual Interest Payment / Current Price = $46 / $1,202.2 = 3.826%

5 0

3 years ago

The yield to maturity (YTM) on 1-year zero-coupon bonds is 7% and the YTM on 2-year zeros is 8%. The yield to maturity on 2-year

Vikentia [17]

Answer:

(a) The arbitrage strategy is to buy zeros with face values of $140 and $1,140 and respective maturities of one and two years, and simultaneously sell the coupon bond.

(b) The profit on the activity equals $0.72 on each bond.

Explanation:

The price of the coupon bond = 140 × PV(7.9%, 2) + 1000 × PV(7.9%, 2)

= 140 × (1-(1/1.079)^2)/0.079 + 1,000/1.079^2

= $1,108.93

If the coupons were withdrawn and sold as zeros individually, then the coupon payments could be sold separately on the basis of the zero maturity yield for maturities of one and two years.

[140/1.07] + [1,140/1.08^2] = $1,108.21.

The arbitrage strategy is to buy zeros with face values of $140 and $1,140 and respective maturities of one and two years, and simultaneously sell the coupon bond.

The profit on the activity equals $0.72 on each bond.

7 0

3 years ago

FreeSpirit is a global consumer products company. It manufactures a number of new products ranging from personal care to food an

Paul [167]

Answer: Prospector

Explanation: In simple words, a prospector refers to an individual or an entity that keeps exploring its environment for some personal goal. Usually these entities keeps continuous researching for innovation so that new products and practices could be developed.

In the given case, Free spirit keeps searching for new product development

and uses different platform for their promotional purposes.

Hence from the above we can conclude that it free spirit is a prospector.

3 0

3 years ago