If there is something wrong with the product, or if there is something in it i.e bugs
Answer: Buying $200 stock in AT&T is an example of investment. As in this case the persons income exceeds his consumption and he buys new capital.
Borrowing $1000 from a bank to buy a car to use in business is also an investment as in this case buying a car is like investing in a cash flow producing asset, as the car will be an asset which will help earn money from the pizza business.
Explanation:
Roommate depositing $100 is an example of saving and not investing.
Taking out a mortgage and buying a house is an example of consumption and not investment.
Answer:
implied credit spread = 1.13 %
Explanation:
given data
interest on foreign government bonds = 7.5%
current exchange rate = 28
forward exchange rate = 28.5
risk-free rate = 4.5%
solution
we get here risk free rate by the forward exchange rate that is
F = spot exchange rate × \frac{1+Rr}{1+Rs} ....................1
put here value
28.5 = 28 × \frac{1+Rr}{1+0.045}
solve it we get
Rr = 0.0637
Rr = 6.37%
so
implied credit spread = interest on foreign government bonds - risk free rate
implied credit spread = 7.5% - 6.37%
implied credit spread = 1.13 %
