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2 years ago

10

Which type of investment offers both capital gains and interest income?

2 answers:

arlik [135]2 years ago

7 0

Bondholders regularly receive interest income at a preset interest rate, or coupon rate, for a specified period of time. This is the bond’s maturity period.<span> Holders can also sell the bonds in the bond market at their current market price.
So the Answer is BONDS
</span>

Veseljchak [2.6K]2 years ago

3 0

Answer:

Which type of investment offers both capital gains and interest income?

A.

property

B.

CDs

C.

stocks

<em><u>D. </u></em>

<em><u>bonds </u></em>

Explanation:

#platofam

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Property taxes in a particular district are 4% of the purchase price of a home every year. If you just purchased a $250,000 home

avanturin [10]

Answer:

Assume the interest rate used for discounting is 5%.

Then, the present value of all the future property tax payments is $200,000.

Explanation:

We have the annual property tax payment is calculated as: Purchased price * tax rate = 250,000 * 4% = $10,000.

The tax payment will form a perpetuity of $10,000 each ( that is: C = 10,000). We apply the formula for calculating present value of perpetuity with assumption that discount rate is 5% to come up with the answer as below:

PV = C/i = 10,000/5% = $200,000.

So, the answer is $200,000.

5 0

2 years ago

You are taking a $5000 loan. You will pay it back in four equal amounts, paid every 6 months starting 5 years from now. The inte

mr Goodwill [35]

Answer:

Following are the solution to the given point:

Explanation:

Calculating the value of the effective interest rate:

Formula:

$\text{Effective interest rate} =\frac{\text{annual nominal rate of interest}}{\text{compound year}}$

$=\frac{12}{2} \\\\ =6\%$

Calculating the value of Effective annual rate of interest:

$=(1+ \text{The effective rate})^{\text{(compound number )}} -1$

$=(1+0.06)^2 -1\\\\=(1.06)^2 -1\\\\=1.1236-1\\\\=0.1236\\\\=12.36 \%$

Calculating the Amount in each semiannual payment:

$= 5000 \times (\frac{F}{P}, 6\% ,9) \times (\frac{A}{P}, 6\%,4)\\\\= 5000 \times 1.689479 \times 0.288591\\\\= 2437.85$

Calculating the value of the total interest paid:

$= 2437.85 \times 4 - 5000\\\\= 9751.40-5000\\\\ = 4751.40$

4 0

2 years ago

A suplier who requires payment with in 10 days, should be most concerned with which one of the following ratios when granting cr

tino4ka555 [31]

Answer: E) Cash

Explanation:

The Supplier should be most concerned with the Cash Ratio when granting credit. The Cash Ratio measures the amount of Cash in addition to the amount of Cash equivalent assets that the company has against it's current Liabilities in other to see if the company can be able to pay off it's Current Liabilities with it's current Cash and Cash Equivalents.

The Supplier will therefore be concerned with this ratio to see if the company is indeed able to pay back within 10 days before they can be able to grant credit.

5 0

2 years ago

Mr. Decker invested $20,000 in cash in his new business. How does the company record the investment?

Rudiy27

Answer:

The company records the investment by the entry:

(D) debit Cash and credit Owner's Equity

Explanation:

Mr. Decker invested $20,000 in cash in his new business. He is the Owner of the company.

In the case, the company that he invested received cash from Mr. Decker.

The company will record the increasing in cash and increasing in Owner's Equity account by the journal entry:

Debit Cash $20,000

Credit Owner's Equity $20,000

8 0

2 years ago

Both Bond Sam and Bond Dave have 7.3 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has three

Ainat [17]

Answer:

-5.14 for sam

-18.01% for dave

Explanation:

We first calculate for Sam

R = 7.3%

We have 2% increase

= 9.3%

We calculate for present value of coupon and present value at maturity using the formula for present value in the attachment

To get C

1000 x 0.073/2

= 36.5

time= 3 years x 2 times payment = 6

Ytm = rate = 9.3%/2 = 0.0465

Putting values into the formula

36.5[1-(1+0.0465)^-6/0.0465]

= 36.5(1-0.7613/0.0465)

36.5(0.2385/0.0465)

= 36.5 x 5.129

Present value of coupon = 187.20

We solve for maturity

M = 1000

T = 6 months

R = 0.0465

1000/(1+0.0465)⁶

= 1000/1.3135

Present value = 761.32

We add up the value of present value at maturity and that at coupon

761.32 + 187.20

= $948.52

Change in % = 948.52/1000 - 1

= -0.05148

= -5.14 for sam

We calculate for Dave

He has 20 years and payment is two times yearly

= 20x2 = 40

36.5 [1-(1+0.0465)^-40/0.0465]

Present value = 36.5 x 18.014

= 657.511

At maturity,

Present value = 1000/(1+0.0465)⁴⁰

= 1000/6.1598

= 162.34

We add up these present values

= 657.511+162.34 = $819.851

Change = 819.851/1000 -1

= -0.1801

= -18.01%

4 0

2 years ago