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3 years ago

A higher interest rate (discount rate) would:________

Business

1 answer:

DIA [1.3K]3 years ago

4 0

Answer: C) Reduce the price of common stock.

Explanation:

A Rise in interest rates would tend to contradict the economy. Because Everyone cuts back on thier spending because there is less money to spend. This results in earnings falling or dropping, next affected are stock prices. Conversely, when rates drops everyone has more money to spend and earnings tend to rise along with prices.

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Oberon, Inc., has a $15 million (face value) 10-year bond issue selling for 99 percent of par that pays an annual coupon of 8.35

Grace [21]

Answer:

The before-tax component cost of debt is 8.489%.

Explanation:

We apply the formula for yield to maturity (YTM) to solve this problem.

YTM = [C + (F-P)/n] / [(F+P)/2] where

C = Coupon payment

F = Face value of bond

P = Present value of bond (or current selling price)

n = Years to maturity

The given values are:

F = $15,000,000

P = 0.99 x $15,000,000 = $14,850,000

C = 0.0835 x $15,000,000 = $1,252,000

n = 10

Applying these values in the above formula,

YTM = [1,252,000 + (15,000,000 - 14,850,000)/10]

/ [(15,000,000 + 14,850,000)/2]

YTM = 1,267,000 / 14,925,000

YTM = 0.08489

YTM = 8.489%

7 0

3 years ago

Read 2 more answers

How is a mutual fund different from an index fund

Assoli18 [71]

A mutual fund can in fact be an index fund. However, the vast majority of mutual funds aren't similar to index funds. Most mutual funds have an objective that is different than that of an index fund. Most mutual funds do not rebalance as often as an index fund. A mutual fund often is more diversified than a pure index fund.

3 0

4 years ago

several hours after eating, a chilled three-bean salad containing home-canned green beans, family members have difficulty breat

disa [49]

I'm not sure if there's ONE correct answer for this question.

the family should call 911 immediately, or another emergency phone hotline if needed. an allergic reaction is most likely happening, which is understandable because some allergies can actually be passed genetically.

let me know if this helps.

7 0

3 years ago

Today the current EUR to USD exchange rate is 1 EURO = 1.19 USD. According to the Bloomberg consensus estimate, the EUR to USD e

mr_godi [17]

Answer:

(a) ii Depreciate

(b) 84.03 Euro

(c) 123.03 Euro

(d) 161.17 USD

(e) 61.17%

(f) 15.29%

Explanation:

(a) The value of USD is depreciating as you can exchange 1.19 USD for 1 Euro but in after four years, you will need 1.31 USD to exchange for 1 Euro. Thus, you will need more dollars for 1 Euro.

(b) To convert USD to Euro, we just divide the USD with the exchange rate,

Euro = 100 / 1.19 ⇒ 84.0336 Euro

(c) We simply use the compound interest rate formula to calculate the value of our investment after four years with compounding interest,

The formula for compound interest rate is,

A = P(1 + r/n)^nt

Where,

A = Final amount of investment

P = Initial principal Invested

r = interest rate

n = number of times interest is compounded per time period

t = number of time periods

A = 84.03 ( 1 + 0.1/1)^4 ⇒ 123.028323 Euro

(d) We convert the euros back to USD using the after 4 year exchange rate of 1 Euro to 1.31 USD,

123.03 * 1.31 ⇒ 161.17 USD

(e) Total Return in USD = (161.17 - 100) / 100 ⇒ 0.6117 or 61.17 %

(f) The annual average return can be calculated by dividing the total return by the number of years = 61.17% / 4 = 15.2925 %

4 0

4 years ago

Read 2 more answers

When the output of some units can be used as inputs to other units, or if two organizations pool markets and expertise that resu

natulia [17]

Answer: Synergies

Explanation: Synergy is achieved when people work together and achieve something greater than the sum of what they could've achieved alone.

When the output of some units in a firm can be used as inputs to other units, synergies develop, which can lower costs and generate profits.

8 0

3 years ago