Answer:
a. What is the expected return of the risky corporate bond over the 5-year holding-period (in %)?
expected return in $ = (50% x 20% x $1,000 x 4) + (50% x 35% x $1,000 x 4) = $400 + $700 = $1,100
holding period return = ($1,100 - $1,000) / $1,000 = 10%
b. What is its effective annual return?
(1 + 10%)⁰°² - 1 = 1.92%
b. What is its effective annual return?
- 2. The government bond is the superior investment
The yield of he corporate bond is very low and the risk is too high.
Answer:
The answer is: D) $32,000
Explanation:
In 20x3, Cris. Co. paid in cash $68,000 for interest, including $15,000 of interest from 20x2.
The amount of cash paid for 20x3 interests = $68,000 - $15,000 = $53,000
Interest payable = interest expense 20x3 - cash paid for 20x3 interests
interest payable = $85,000 - $53,000 = $32,000
Answer:
d. the camry becomes an inferior good because the good is now perceived as lower in quality than a lexus
Explanation:
There are a number goods that over time, for a variety of reasons, transition from being a normal good to an inferior good or from being an inferior good to a normal good. One such example of a good is the Toyota Camry. In the 1980s, more income for a household usually resulted in more Camrys being purchased. However, today more Toyota Camrys are purchased by households that have experienced a reduction in income.
How could this happen?
<u>This could only have happened because of a change in perception in households over time. </u>
It is stated in the Scenario that ''today more Toyota Camrys are purchased by households that have experienced a reduction in income.''
<u>That means Toyota Camry has become an inferior good that is purchased more when income falls.</u>
<u>Hence, the only reason the scenario would have occurred is that the camry becomes an inferior good because the good is now perceived as lower in quality</u> than a lexus
The solution is to open joint bank account. Joint account will allow you to deposit or withdraw cash from your dual income without any fear that one account will get lost. This will help you manage your money and also share it to one of your family members. Your income is safe with you having a joint account because you can monitor it in one transaction only.
It will always be a problem ahead but you will have to overcome and uprise that problem
