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NARA [144]
3 years ago
9

An investor holds two bonds, one with 5 years until maturity and the other with 20 years until maturity. Which of the following

is more likely if interest rates suddenly increase by 2%? 1)The 5-year bond will decrease more in price. 2)The 20-year bond will decrease more in price. 3)Both bonds will decrease in price similarly. 4)Neither bond will decrease in price, but yields will increase. please explain
Business
1 answer:
cricket20 [7]3 years ago
4 0

Answer:

2) The 20 year bond will decrease more in price

Explanation:

Bonds represent debt securities whereby the issuer raises long term finance, with an obligation to pay a fixed rate of coupon payments to the lender and principal repayment upon maturity.

Bond prices refer to the present value of a bond's stream of coupon payments and principal repayment at the end.

The market rate of interest represents an investors required rate of return also known as yield to maturity (YTM).

Bond prices and interest rates have inverse relationship. When market interest rates increase, the price of bonds fall.

In the given case, the fall in the value would be more in case of 20 year old bond since the interest rate pattern is more certain in shorter duration than for longer duration.

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Retained earnings a.over time will have a direct relationship with the amount of cash on hand if the corporation is profitable.
Gwar [14]

Answer:

d.is the cumulative total of net income, minus net losses, and minus dividends.

Explanation:

As we know that

The stockholder equity statement involves the common stock and the retained earnings statement

It is prepared to find out the ending balance of common stock and the retained earning that is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income or minus net loss - dividend paid

And, the ending balance of the common stock = Beginning balance of common stock + issuance of the shares

3 0
2 years ago
Rachel wants to display jewelry in her store window in a way that will attract customers. She wants the display to complement an
crimeas [40]
The answer is D because with a light background it would be more easier to see and more attractive
5 0
3 years ago
Read 2 more answers
Which of the following is true?
kifflom [539]

Answer:

the correct option is c) change in the money wage and other resource prices does not shift the long run aggregate supply

Explanation:

First of all aggregate supply can be defined as the sum total of all the goods and services that are supplied in the economy during a defined period of time.

In the given question the option C is right because it is assumed that in the case of long run aggregate supply , the supply curve tends to remain static because any kind of change in the aggregate demand causes only temporary changes in the total output of the economy and the slope of the curve remains vertical. It is also assumed that the economy is being used at optimal as only factors like labor, capital, and technology can bring in aggregate supply.

Options a) and b) can't be true because if the supply curve is gonna shift , it is first going to shift in short run aggregate supply then long run aggregate supply , not the other way around.

6 0
3 years ago
Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 233 units of output. At
Anika [276]

Answer:

Continue operating; $699

Explanation:

The equilibrium price is $10.

MR = MC at 233 units of output.

At this output level, ATC is $12, and AVC is $9.

The AFC or average fixed cost

= ATC - AVC

= $12 - $9

= $3

The total fixed cost

= AFC\ \times Q

= \$ 3\ \times\ 233

= $699

The equilibrium price is able to cover the average variable cost so the firm should continue production in the short run.

4 0
3 years ago
When is output level and supply inelastic? short run or long run
tia_tia [17]

Output and input levels always tend to an equilibrium point it the long run, meaning they are inelastic in the long run.

Elasticity refers to how much supply and/or demand changes with changes in pricing. The more elastic, the more change there is.

In the short-term, output and and supply can change dramatically, but in the long run things tend back to the middle (equilibrium).

4 0
2 years ago
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