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Juli2301 [7.4K]
3 years ago
13

Suppose the risk-free rate is 3.5%; on average, an AAA-rated corporate bond carries a credit spread of 0.3%, an A-rated corporat

e bond carries a credit spread of 1.1%, and a B-rated corporate bond carries a credit spread of 3.9%. Company XYZ's outstanding debt is rated BBB by rating agencies. What would be the cost of debt for XYZ based on prevailing market rates? Multiple Choice
A .4%
B .5%
C .8%
D .6%
Business
1 answer:
KIM [24]3 years ago
3 0

Answer and Explanation:

The answer given in the question are not correct. Following should be the choices:

A: 6.5%

B: 7.4%

C: 3.8%

D: 4.6%

The correct answer is A. 6.5 %

The reason is:

3.5% x 1.1% = 4.6%

3.5% + 3.9% = 7.4%

It has to be in between this which is,

4.6% < 6.5% < 7.4%

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One unit of a peso in a Latin American country was defined as equivalent to 12 grains of "fine" (pure) gold, while one unit of i
Grace [21]

Answer:

1 dollar = 1.5 peso

Explanation:

An exchange rate denotes the value of one currency in terms of another currency. Exchange rates can be of two kinds, spot rate and forward rate.

Spot rate is the rate quoted by bank for buying or selling foreign currency as on today.

Forward exchange rate on the other hand represents rate quoted by bank today for buying and selling foreign currency on a future date.

<u>Given </u>: 1 unit of peso = 12 grains of gold

            1 unit of US Dollar = 18 gains of gold

<u>To find</u> : 1 peso = ___ dollars

           1 grain of gold = \frac{1}{12} peso

similarly, 1 grain of gold = \frac{1}{18} dollars

this means, \frac{1}{12}\ peso\ = \ \frac{1}{18}\ dollars

it means 1 peso = \frac{12}{18} \ dollars

or 1 peso = \frac{2}{3} \ dollars

or 1 dollar = 1.5 pesos

6 0
3 years ago
2. In a recent large PowerBall lottery, the prize was reported to be worth $590 million, which could be taken in 25 equal annual
deff fn [24]

Answer:

5.5%

Explanation:

This is an Annuity Due question. In an annuity due, recurring payments occur at the beginning of the yearIt is asking for the RATE. Using a financial calculator(on BEG mode), input the following;

Duration; N = 25

Recurring payment; PMT = 23.6

Present value ; PV = -334

One-time future cashflow; FV = 0

Then compute the interest rate; CPT I/Y = 5.499%

Therefore, the lottery commission is using about 5.5% interest rate.

3 0
3 years ago
Prompt<br> Why is it important to eliminate debt as soon as possible?<br> Read More &gt;&gt;
stich3 [128]

Explanation:

You don't make the decisions about your finances until you have an outstanding debt; your creditors do. You determine how much you are charging for charge it. In some situations, you can increase the interest rate and the minimum payment and you can change your spending to suit it for less than two months.

You Should try to clear out the debt as quickly as possible, but not merely because it saves you money. The side effects of debt will influence other crucial aspects of your life so you don't make more profit and get what you want.

You exude confidence, however once you are out of debt. "You are appealing to people,". "And what do you guess? You draw money instead. So get out of your debt then hold out your debt, if you ask me, the quicker the better.

7 0
3 years ago
Read 2 more answers
Assume that you have been hired by a large international bank that is looking to develop a smartphone app to help college studen
wel

Answer:

Determining that smartphone apps and social media aps are important parts of a bank's future plans to reach young consumers. ⇒ <u>New Product Strategy.</u>

Tweeting out the availability of a new smartphone app that helps young professionals manage their financial lives better. ⇒ <u>Product launch.</u>

Inviting younger "fans" of the bank's social media sites to have a free trial of the new smartphone app. ⇒ <u>Test marketing. </u>

Having a Faceb-ook discussion with consumers on what they would ideally like to have from a bank smartphone app. ⇒<u> Idea generation.</u>

Creating a prototype of the smartphone app. ⇒<u> Product development. </u>

<u></u>

Using Tw-itter to ask followers what they are willing to pay for smartphone apps. ⇒ <u>Business analysis. </u>

Developing a social media site that allows college students to review and provide feedback on new product ideas. ⇒<u> Idea screening. </u>

5 0
3 years ago
A buyer will receive a utilities bill for an estimated $400 at the end of the month. At closing, the seller has used an estimate
MrMuchimi

Answer:

Dr Seller Account $100

Cr Buyer Account      $100

Explanation:

The property sold on 15th of the month by Mr. A to Mr. B and the utility bill received later of this month would be split between Mr. A and Mr. B. The basis for the split of the utility bills would be the share that Mr. A utilized the facilities and in this scenario, it is $100. Hence the buyer Mr. B has receivable of $100 and the seller Mr. A has a liability payable of $100 amount.

Hence the buyer will debit the bill by $100 receivable and the Seller will debit the bill owed to buyer by $100.

3 0
3 years ago
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