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lara31 [8.8K]
3 years ago
11

You have funds that you want to invest in bonds, and you just noticed in the financial pages of the local newspaper that you can

buy a $1,000 par value bond for $800. The coupon rate is 10% (with annual payments), and there are 10 years before the bond will mature and pay off its $1,000 par value. You should buy the bond if your required return on bonds with this risk is 12%.
Business
1 answer:
Lera25 [3.4K]3 years ago
4 0

Answer:

The answer is: Yes, you should buy this bond.

Explanation:

In order to buy the bond, you are going to invest $800

Each year, during 9 consecutive years, you will earn $100 in interest.

At the end of year 10, you will receive $1,000.

To find out if this bond is a good investment, you must calculate its net present value (NPV) using this formula: NPV = ∑(P/ (1+i)t ) – C, were:

  • P = periodic cash flows (100, 100, 100, 100, 100, 100, 100, 100, 100, 1000)
  • i = discount rate = 12%
  • t = number of time periods = 10
  • C = capital = 800

The NPV of this investment is $54.80, that means it is good investment for you. Any investment with a NPV ≥ 0 is considered a good investment.

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<h3>What do you mean by Credit card?</h3>

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Customers who are more likely to have medium and low credit often use credit cards, but do not leave a balance. They also have a savings account and a retirement account.

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7 0
2 years ago
Suppose changes in autonomous consumption affect investment while changes in autonomous government spending do not. in this case
Charra [1.4K]
 in this case, identical changes in autonomous consumption and autonomous government spending: <span> have different effects on equilibrium income

When a factor is implemented and have two different reaction, it is safe to assume that that factor have two different effects.
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8 0
3 years ago
A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 a
ICE Princess25 [194]

Answer:

<h2>In this case,the correct answer is option b. or real output rose and price level fell.</h2>

Explanation:

GDP Deflator in Macroeconomics,shows the inflation or deflation rate in a country within the specific time period.Hence,it measures the changes in the average price level of goods and services in any country or economy over a particular period of time.It is mathematically calculated by dividing the nominal GDP of the country or economy by its real GDP.Now,a decrease in the nominal GDP relative to the real GDP or GDP deflator implies an deflationary impact or an increase in the average price level of goods and services in the economy and vise versa.Note that in this case both the nominal GDP and GDP deflator decreased from 2009 to 2010 which advocates that the price level in the economy fell(deflation) and the real output or GDP rose or increased due to deflationary impacts as reflected by the decline in GDP deflator.

5 0
3 years ago
Beckenworth had cost of goods sold of $11,221 million, ending inventory of $3,889 million, and average inventory of $2,145 milli
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Answer:

69.77 days

Explanation:

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days' sales in inventory = = 365 / 5.231235 million = 69.77 days

3 0
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