Answer:
D.Being punctual, managing time and enforcing polices.
Because financial markets are <u>Imperfect</u>, securities buyers and sellers do not have full access to information and cannot always break down securities to the precise size they desire.
<u>Explanation:</u>
An imperfect market is a whole where individual buyers and sellers may influence prices and efficiency, where there is no full transparency of knowledge about products and costs, and where there are large barriers in the sector to enter or exit.
Imperfect markets may not follow the exact measurements of an actual or competitive possible market. If financial businesses were ideal, investors would be constantly and freely responsive to all erudition about any security for trade-in prime and corresponding businesses.
Answer:
10,064 bonds
Explanation:
Given:
Amount to be raised = $2,800,000
Par value (FV) = $1,000
Maturity (nper) = 20×2 = 40 periods
Yield (rate) = 6.49 ÷ 2 = 3.245% or 0.03245
Coupon payment is 0 as it's a zero coupon bond.
Assume it's compounded semi-annually.
Calculate the price of the bond today using spreadsheet function =PV(rate,nper,pmt,FV)
Price of bond is $278.23
PV is negative as it's a cash outflow.
Number of bonds to be sold = Total amount to be raised ÷ Price of bond
= 2,800,000 ÷ 278.23
= 10,064 bonds
Company should sell 10,064 bonds to raise $2.8 million
Answer:
liquidity premium theory
Explanation:
The liquidity premium theory states that those that invest in bonds do prefer high liquid as well as securities that are short-dated so that it can be sold fast compare to long-dated ones. It states that investors do get compensation for higher default risk when there is change in interest rate.
It should be noted that The liquidity premium theory of the term structure states the following: the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a term premium that responds to supply and demand conditions for that bond.
