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Elina [12.6K]
3 years ago
9

Many people who want to start investing for their future want to start today, which implies an annuity stream that is paid at th

e beginning of the period. Beginning-of-period cash flows are referred to as:_______.
a. ordinary annuities.
b. annuities due.
c. perpetuities.
d. present values.
Business
1 answer:
navik [9.2K]3 years ago
4 0

Answer:

b. annuities due

Explanation:

Annuities due -

It refers to the amount which need to be paid at the regular interval of time , just before the beginning of the new phase , is referred to as annuities due .

The most common example of annuities due is rent , which need to be paid after every month in the starting .

Hence , from the given information of the question ,

The correct option is annuities due.

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Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as
Elina [12.6K]

Answer:

The question is missing the options which are below:

A Real risk-free rate differences.  

B Tax effects.  

C Default risk differences.  

D Maturity risk differences.  

E Inflation differences.  

The correct answer is option C,default risk differences.

Explanation:

Default risk is the increase in return given to an investor to compensate the investor for the likely losses that may arise due to the inability of the borrower to make funds available to the investor on the maturity date or even in required amount.

Different debt instruments have different default risk depending on their credit rating as rated by international rating agencies.Such rating is a function of many factors,which includes:

Balance sheet position

Profitability

Liquidity strength of the company

Macro-economic factors and some others.

Liquidity refers to the ability of the company to settle obligations such as repayment of bonds and interest  when due.

Invariably,liquidity has a higher impact in determining credit rating as well as default risk of an instrument.

3 0
3 years ago
Diane owns a bakery where she sells cupcakes. Two blocks down there is another bakery, CC's Bakery, that sells cupcakes for $1 l
BabaBlast [244]

Answer:

competition based pricing

Explanation:

When a company engages in a competition based pricing strategy, they will set the price of their products or services taking based on the price of their main or direct competitor. The product or service provided by the competitor is used to benchmark both the price and quality of the goods and services offered by the company.

For example, Coca Cola products are used as a price reference for all the soda products sold by other companies.

8 0
3 years ago
5 An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy
qaws [65]

Answer:

each policy will pay $25,000 of the loss

Explanation:

Based on the scenario being described within the question it can be said that the each policy will pay $25,000 of the loss. This is an equal share for each policy and is due to them having the pro rata liability clause. This clause states that a policy is only liable for an equal percentage of the loss if the insurer has other policies from other companies. As in this case.

5 0
3 years ago
Esther and Elizabeth are equal partners in the EE Partnership. The partners formed the partnership seven years ago by contributi
Ber [7]

Answer: Esther does not recognize any gain or loss on the distribution and her remaining basis in EE is $15,000

Explanation:

Base on the scenario been described in the question, repayment of liabilities is treated as a cash distribution. Esther's share of the debt reduction is Since this amount is lower than her outside basis ($40,000) she does not recognize a gain or loss.reduces her outside basis by the $25,000, which leaves her $15,000 of outside basis in EE afterthe debt repayment.

8 0
3 years ago
A woman buys a house for a ​$320000. She pays ​$40000 down and takes out a mortgage at 5.7​% for 20 years on the balance. Find h
sdas [7]

Answer:

PMT= 1957.850

Explanation:

For this case the total payment is $320000, and she pays $40000 so the remain amount to pay would be:

$320000-40000=$ 280000

For this case we assume that the annual interest rate is APR=5.7% =0.057 on fraction.

The total number of years are 20. For this case n represent the number of payments per year and since we have monthly payments then n =12.

In order to find the PMT we can use the following formula:

PMT= \frac{P(\frac{APR}{n})}{[1-(1+\frac{APR}{n})^{-nt}]}

On the last expression the APR needs to be on fraction and P represent the principal amount, for this case P = $280000. So if we replace we got:

PMT= \frac{280000(\frac{0.057}{12})}{[1-(1+\frac{0.057}{12})^{-12*20}]}

PMT= 1957.850

And we can verify this using the following excel function: "=PMT(0.057/12,12*20,-280000)"

3 0
3 years ago
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