Answer:
$955.37 per bond
Explanation:
Callable bonds are generally worth less than normal bonds since the call option decreases the value of the bondholder while increases the value of the issuer. Bonds will only be called if the interest rate falls below a certain level and calling them is cheaper (form the issuer's point of view) than keep paying high interest rates.
market price of callable bonds:
- PV of face value = $1,000 / (1 + 5%)¹⁰ = $613.91
- PV of coupon payments = $80 x 7.7217 (PV annuity factor, 5%, 10 periods) = $617.74
- Price of call option = [(1 + 5%)⁵ x $1,000] - $1,000 = $1,276.28 - $1,000 = $276.28
current market price of callable bonds = $613.91 + $617.74 - $276.28 = $955.37
Answer: Trade creation
Explanation:
Trade creation is the increase in economic welfare which occurs when a country joins a free trade area, like the customs union. Trade creation will happen when the ltariff barriers has been reduced which leads to lower prices.
Trade creation leads to lower cost on producers which will lead to a rise in economic welfare and consumer surplus. Trade creation also leads to expansion of trade.
Satisfaction is the accounting system linked to family loyalty and indebtedness.
<h3>What is Satisfaction?</h3>
This refers to the fulfilment needs of a person being met as a result of an action or a consequence.
With this in mind, we can note that satisfaction is the accounting system linked to family loyalty and indebtedness as this controls the interactions and patterns that operate in a family over time and that are linked to expectations.
Read more about satisfaction here:
brainly.com/question/584434
Answer:
Profit Maximisation
Explanation:
Profit is the difference between total revenue (receipts) from sale & total cost (expenditure) on production.
Total Revenue = Price x Quantity ; Total Cost = Average Cost x Quantity
Economists study all the producer behaviour, based on assumption that : Goal of firm is Profit Maximisation.
Maximising Profit implies maximising the difference between Total Revenue & Total Cost [ TR - TC] . This further leads to producer equilibrium rule of Marginal Revenue = Marginal Cost [MR = MC] ; i.e additional revenue per unit sold equals additional cost per unit production.
Answer:
The correct answer is d.
Explanation:
The fallacy of composition consists in inferring that something particular is true, and that therefore it is also true about a whole, basing this only because it is true about one or more of its parts. For example, if we establish that a piece of metal can not break at high temperatures, therefore the machine of which it is part will not break at high temperatures.
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