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4 years ago

When the price level decreases:

Business

1 answer:

Stells [14]4 years ago

6 0

Answer:

A. The demand for money falls and the interest rate falls

Explanation:

As in general sense when the price level falls it means that the goods will cost less than the earlier stated cost. As the cost will fall the value of money will increase in terms of goods.

Accordingly an individual can buy more goods with same amount of money. This will reduce the demand for money in the market.

Ultimately people will not borrow money and that the demand for loans will fall. Accordingly as banks earn through interest income on loans they will be ready to lend at a lower rate of interest.

Thus, option A is correct.

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a perpetual bond with a par value of $1,000 and a semiannual coupon has a yield to maturity of 5.20% and a current price of $1,0

ycow [4]

Rate = 5.2% / 2 = 2.6%

Price = Semi annual coupon / Yield

1,055 = Semi annual coupon / 0.026

Semi annual coupon = 27.43

Annual coupon = 27.43 * 2 = 54.86

Current yield = (Coupon / price) * 100

Current yield = (54.86 / 1,055) * 100

Current yield = 5.20%

A perpetual bond, also regarded colloquially as a perpetual or perp, is a bond without a maturity date, consequently allowing it to be handled as equity, not as debt. Issuers pay coupons on perpetual bonds all the time, and they no longer ought to redeem the most important. Perpetual bond coin flows are, consequently, the ones of perpetuity.

A perpetual bond is a bond not using a maturity date that isn't always redeemable however can pay a regular circulate of interest for all time.

Maturity or maturity date is the date on which the very last fee is due on a loan or other financial device, consisting of a bond or term deposit, at which factor the major is because of being paid. Most devices have a hard and fast maturity date which is a particular date on which the device matures.

Learn more about Perpetual bonds here: brainly.com/question/14685796

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4 0

1 year ago

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100.000 shares of common

Gnesinka [82]

Answer:

Power Drive Corporation

Stockholders' Equity Section

December 31, 2021

Paid in capital:

Common Stock $1 par $160,000

(160,000 shares authorized, 157,250

shares outstanding)

Additional paid in capital, $8,360,000

in excess of par value

Additional paid in capital, $13,750

from Treasury Stock

Total paid in capital $8,533,750

Retained earnings $2,879,625

Sub-total $11,413,375

Treasury Stock ($165,000)

Total Stockholders' Equity $11,248,375

Explanation:

beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock, $100,000 + $60,000
Additional Paid-in Capital, $5,000,000 + $3,360,000 + $13,750
Retained Earnings, $2,500,000 + $650,000 - $270,375
treasury stock $330,000 - $165,000

Net income for the year ended December 31, 2021, is $650,000.

March 1 Issues 60,000 additional shares of $1 par value common stock for $57 per share.

Dr Cash 3,420,000

Cr Common stock 60,000

Cr Additional paid in capital 3,360,000

May 10 Purchases 5,500 shares of treasury stock for $60 per share.

Dr Treasury stock 330,000

Cr Cash 330,000

June 1 Declares a cash dividend of $1.75 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

Dr Retained earnings 270,375

Cr Dividends payable 270,375

July 1 Pays the cash dividend declared on June 1.

Dr Dividends payable 270,375

Cr Cash 270,375

October 21 Resells 2,750 shares of treasury stock purchased on May 10 for $65 per share

Dr Cash 178,750

Cr Treasury stock 165,000

Cr Additional paid in capital 13,750

4 0

4 years ago

In the capital asset pricing model, an increase in inflationary expectations will be reflected by a(n)?

Artyom0805 [142]

In the capital asset pricing model, an increase in inflationary expectations will be reflected by a parallel shift upward in the security market line.

The Capital Asset Pricing Model (CAPM), which additionally modifies the risk premium, explains the link between a security's projected return and beta model.

The link between systematic risk and anticipated return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM). The CAPM is a tool that is frequently used in finance to price hazardous securities and calculate projected returns for assets based on their risk and cost of capital.

To learn more about Capital Asset Pricing Model refer

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3 0

2 years ago

Read 2 more answers

Where is the most common workplace for people in the finance cluster?

Reika [66]

I would assume inside of an office building with cubicles.

8 0

3 years ago

Read 2 more answers

A decision tree is _____.

Evgesh-ka [11]

Answer:

c. a graph of decision and their possible consequences

Explanation:

Decision tree -

It is a model in the form of a tree , which act as a supporting tool to get all the possible outcomes i.e. , utility , resource cost , outcomes , is referred to as decision tree.

Hence , from the given options of the question, the correct statement regarding decision tree is c. a graph of decision and their possible consequences .

4 0

3 years ago