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eduard
3 years ago
9

Which of the following bonds has the greatest price risk? A 10-year $100 annuity. A 10-year, $1,000 face value, zero coupon bond

. A 10-year, $1,000 face value, 10% coupon bond with annual interest payments. All 10-year bonds have the same price risk since they have the same maturity. A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments.
Business
1 answer:
kogti [31]3 years ago
5 0

Answer:

A 10-year, $1,000 face value, zero coupon bond.

Explanation:

Zero coupon bonds are sold at a deep discount, and do not pay coupons, only pay the full par value price at maturity.

Zero coupon bonds are riskier than other types of bonds because they are subject to interest tax risk: this means that even if the bond does not pay coupons, the IRS still computes an imputed interest that the bond would have received, and charges an income tax over it.

If the bondholder of a zero coupon sells the bond before maturity, the risk of having paid more in both income taxes on imputed intersest, plus the initial price of the bond itself, than the gain from the sale, is very high.

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What happens if an economy operates at a short-run equilibrium output that exceeds its long-run capacity,
g100num [7]

Answer:

There would be an increase in the price of resources for production

Explanation:

When an economy decides to operate at a short-run equilibrium output the cost of obtaining resources for production of goods and services would increase. and this increase in price of resource will cause the short run aggregate supply curve ( SRAS )to shift to the left.

The short run aggregate supply is the total goods and service produced in an economy at different prices while some of the resources used for the production of the goods and services are fixed

8 0
3 years ago
Read 2 more answers
Helmert Federal, a financial institution, acquires its funds primarily from the deposits of its customers, and then uses these f
Ghella [55]
<h3>Helmert Federal is a savings and loan association </h3>

Explanation:

A Savings and Loan Association (S&L), or thrift service, is a financial institution specialized in taking savings deposits and making mortgages and other loans. A savings and loan company (S&L) has today been one of the main sources of home buyers ' mortgage loans.

In the specified example, Helmert Federal acquires its funds mainly from its customers ' deposits, and then uses those funds to make individuals ' mortgage loans is a form of savings and loan association.

6 0
3 years ago
Pluto Inc. borrows $3000 from Second National Bank by signing a promissory note. Recording this transaction will include which o
Angelina_Jolie [31]

Answer:

b. Debit cash and d. Credit note payable

Explanation:

On borrowing from the bank, the entries to be posted by Pluto Inc. will be;

Debit Bank/Cash account  $3000

Credit Credit note payable  $3000

The credit represents the liability which is the obligation to payback the loan at a future date.

The right options are; b. Debit cash and d. Credit note payable.

4 0
3 years ago
Last month when Holiday Creations, Inc., sold 42,000 units, total sales were $297,000, total variable expenses were $222,750, an
nika2105 [10]

Answer:

Results are below.

Explanation:

Giving the following information:

Sales in units= 42,000

Total sales= $297,000

Total variable expenses= $222,750

Total fixed expenses= $36,900

<u>To calculate the contribution margin ratio, we need to use the following formula:</u>

contribution margin ratio= (sales - total variable cost) / sales

contribution margin ratio= (297,000 - 222,750) / 297,000

contribution margin ratio= 0.25

<u>Now, the effect on the income of an increase in sales:</u>

Effect on income= contribution margin ratio*increase in sales

Effect on income= 0.25*1,800

Effect on income= $450 increase

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3 years ago
On December 31, 2019, Oriole Inc. borrowed $3,240,000 at 13% payable annually to finance the construction of a new building. In
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