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Gnoma [55]
3 years ago
7

which of the following, if true, would illustrate why price indexes such as the cspi might overstate inflation in the cost of go

ing to college? check all that apply.
Business
1 answer:
alexira [117]3 years ago
7 0
<span>When we talk about the CSPI we are talking about the inflation and changing prices. Then as the price of calculators rose, fewer students decided to buy calculators, opting instead to use the free calculators in their cell phones.</span>
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You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows.
Firlakuza [10]

Answer:

A.- DECREASE

B.- DECREASE

C.- INCREASE

D.- INCREASE

E.- INCREASE

Explanation:

a. The discount rate increases

DECREASE the discoutn factors will be higher therefore, the present values lower.

b. The cash flows are in the form of a deferred annuity, and the total to $100,000. You learn that the annuity lasts for 10 years rather than 5 years, hence that each payment is for $10,000 rather than for $20,000

DECREASE Because the cashflow is generate on a longer period there is more exposure to discount rates.

c. The discount rate decreases

INCREASE The discount factor are lower. This situation is the opposite as (a)

d. The riskiness of the investment's cash flows <u>decreases</u>

INCREASE a lower risk derivates in lower cost of capital thus, lower iscount rates. This increase the present value of the cashflow.

e. The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.

INCREASE as most of the future cash flows are at the beginning they have less exposure to time value of money.

4 0
3 years ago
At the beginning of the current period, Bramble Corp. had balances in Accounts Receivable of $196,800 and in Allowance for Doubt
olasank [31]

Answer and Explanation:

The journal entries are shown below:

a. Account receivable Dr $864,300

          To Sales revenue  $864,300

(Being the sales revenue is recorded)        

Cash Dr $687,610

        To Account receivable $687,610

(Being the collections is recorded)

2. Allowance for doubtful debts $6,804

        To Account receivable $6,804

(Being the written off amount is recorded)

3.  Account receivable Dr $3,219

        To Allowance for doubtful debts $3,219

(Being the previous written off amount is recorded)

Cash Dr $3,219

     To Account receivable $3,219

(Being the recovery is recorded)

4. Bad debt expense $18,075

        To Allowance for doubtful debts $18,075

(Being the bad debt expense is recorded)

The computation is shown below:

= $24,000 - $9,510 + $6,804 - $3,219

= $18,075

Only these entries are recorded

3 0
3 years ago
Select the true statement about default risk. It is the risk that the bond's price will fall below its par value. Bondholders ha
Novosadov [1.4K]

Answer:

Bondholders have a degree of legal protection against default risk, but it is not comprehensive.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

The par value of a bond is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a bond gives the basis on which periodic interest is paid. Thus, a bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a bond would be issued at par (face) value when the bond's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.

In Economics, bonds could either be issued at discount or premium. A bond that is being issued at a discount has its stated rate lower than the market interest rate, on the specific date of issuance while a bond that is issued at a premium, has its stated rate higher than the market interest rate on the specific date of issuance.

Default risk in bonds refer to the risk that a bond issuer (borrower) is unable to pay the principal or interest agreed upon in the contract with the bondholder (lender) in a timely manner.

Hence, the true statement about default risk is that bondholders have a degree of legal protection against default risk, but it is not comprehensive.

5 0
3 years ago
PAKSA : ANG PAGHAHANAP BUHAY NG MGA INA SA TAHANAN ANG SINASABING DAHILAN SA PAGKALIGAW NG LANDAS NG MARAMING ANAK O KABATAAN. S
Fed [463]
That looks uhhh cool ig.
8 0
3 years ago
You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.50 = €1.00 and the dolla
Verdich [7]

Answer:

The correct answer is (B) Buy euro at $1.50/€, buy £ at €1.25/£, sell £ at $2/£

Explanation:

The dollar- euro exchange rate is quoted as $1.50 = €1.00

the dollar-pound exchange rate is quoted at $2.00 = £1.00

To calculate the actual cross rate we use; S(euro divided by pounds) =  S(dollar/pounds) ÷ S(dollar/euro).

Using symbols to denote this, we have S(€/£) = S($/£) / S($/€)

S(€/£) = S(2/1) ÷ S(1.50/1)

= (2 / 1.5)

= €1.33.

Consequently, from this result we now know that the euro is undervalued with respect to pounds under the cross rate being offered by the bank. This implies that you should first buy the euro, convert to pounds, and eventually convert back to dollars, this would enable you make money as an investor.

3 0
3 years ago
Read 2 more answers
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