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Inga [223]
4 years ago
12

What represents additional compensation provided to bondholders to offset the possibility that the bond issuer might not pay the

interest and/or principal payments as expected?
Business
1 answer:
Marizza181 [45]4 years ago
3 0

Answer: Default risk premium

Explanation:

 The default risk premium is one of the type of the additional amount or payment that is usually calculated by using the effective concept as it is difference between the risk free rate and the overall debt interest rate.  

The main objective of the default risk premium is make the additional type of payment in the form of compensation to the borrower and all an organizations or companies are indirectly paying the default risk premium.    

 According to the given question, the Default risk premium is the term which is used to represent the additional type of compensation which is specifically provided by the bond holder.

Therefore, Default risk premium is the correct answer.

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A 10-year annual payment corporate bond has a market price of $1,050. It pays annual interest of $100 and its required rate of r
bija089 [108]

Answer:

bond under priced is  $14.18

Explanation:

given data

market price = $1,050

annual interest = $100

rate of return = 9 percent

time period = 10 year

solution

we get here bond mis priced so for we get first theoretical Price of the bond that is

theoretical Price of the bond  = annual interest × \frac{1- (1+r)^{-t }}{r} +  \frac{1000}{(1+r)^t}  ........1

theoretical Price of the bond  = 100 × \frac{1- (1+0.09)^t }{-10} + \frac{1000}{(1+0.09)^{10}}    

theoretical Price of the bond  = $1064.18

but actual Price is $1050

so here bond is under priced as  $1064.18 - $1050

bond under priced is  $14.18

6 0
3 years ago
3. What are you doing to maxiumize your profits at this time?​
Zanzabum

Answer:

investing

Explanation:

it is good to invest your money in things that you know will be of greater value in the future. For example, "Apple statistics" states that If you had bought $1,000 worth of Apple shares on January 9, 2007, the day Steve Jobs unveiled the original iPhone at MacWorld 2007, your investment would now be worth $26,103.

8 0
4 years ago
Read 2 more answers
What is an investment instrument in which you purchase a part of a collection of investments?
ki77a [65]

Answer:

Mutual Fund

Explanation:

In mutual fund, a group of people gathered their capital and manage all of it under one management. (usually, they trust this fund to a company who hired several experts in finance).

That company will diversified that capital into several different investment in order to minimize the risk. The original owner of the capital just need to sit back and accumulate the profit without having any direct influence in the investment.

Since the capital is belong to the members , Each members of the mutual fund will own every single parts of the investments collection  that the company make.

8 0
4 years ago
Historically, the best asset for the long-term investor wanting to fend off the threats of inflation and taxes while making his
OlgaM077 [116]

Answer:

Stocks

Explanation:

Stocks also referred or recognized as the equity or the shares, it is defined as the kind or form of the security which signifies the ownership that is proportionate while issuing to corporation or business.

The stock is entitles the stakeholders to the proportion of the assets and the earnings of the corporation, and these investments could be bought from online stock brokers.

So, the best assets for the long term investor in order to fend off the threats of taxes and inflation when making the money to grow is stocks.

5 0
3 years ago
In recording business transactions, evidence that an accounting transaction has taken place is obtained from
hram777 [196]

In recording business transactions, evidence that an accounting transaction has taken place is obtained from source documents. A source document is the first and origional way that transactions are entered for an accounting system. Everything in the source documents then gets transferred into a companies accounting system and stored for later use. The first and original documents are the source documents because they are the source of where the first transactions were recorded.

6 0
3 years ago
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