Answer:
B. $2,000
Explanation:
The principal amount is $100,000
Interest rate is 8% usually per year ( 12 months)
Loan duration, three months:
Annual interest = $100,000.00 x 8%
=$100,000.00x 0.08
=$ 8000.00
Interest for 3 months
=3/12x$8000.00
=0.25x$8000.00
=$2000
Answer:
it serves as a medium of exchange
Explanation:
<em>Money facilitates trades because it serves as a medium of exchange.</em>
<u>Trade generally involves the exchange of goods/services for another goods/services or money. The exchange of goods/services for another goods/services is termed trade by barter.</u>
Generally, all over the world, money is recognized as a medium of exchange. Each good/service can easily be evaluated in terms of money and the amount is exchanged during trading.
Answer: Variable interest rate loan
Explanation:
Given, Sara has a loan with an interest rate of 2% now, but according to the terms and conditions, the interest rate could quadrupole after 18 months.
That means the interest rate will change after 18 months.
The term that summarize the situations would be "variable interest rate loan"
- A variable interest rate loan is defined as a loan in which the interest rate charged on the current balance fluctuates over time as market interest rates changes.
- It mostly generate more interest.
Answer:
a.
r = 0.06697 or 6.697% rounded off to 6.70%
b.
r = 0.1202 or 12.02%
Explanation:
a.
Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
- D0 * (1+g) is dividend expected for the next period /year
- r is the required rate of return or cost of equity
Plugging in the values for P0, D0 and g in the formula, we can calculate the value of r to be,
76 = 0.5 * (1+0.06) / (r - 0.06)
76 * (r - 0.06) = 0.53
76r - 4.56 = 0.53
76r = 0.53 + 4.56
r = 5.09 / 76
r = 0.06697 or 6.697% rounded off to 6.70%
.
Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate
rM is the market return
r = 0.059 + 1.2 * (0.11 - 0.059)
r = 0.1202 or 12.02%
