Answer:
1. the prices of existing bonds would rise
Explanation:
General Interest rates and price of a bond are inversely related. The market interest rate also reflects an investors expected rate of return also referred to as yield to maturity i.e YTM.
Mathematically, price of a bond is the present value of it's future stream of coupon payments as well as principal repayments discounted at investors expected rate of return i.e YTM.
So, when market interest rates fall in general, this would lead to a rise in the price of bonds as general interest rates represent yield to maturity.
General technological advance is most likely to cause the production possibilities frontier to shift outward from a to b.
Technology has always been vital for organisations, but in recent years, that importance has increased significantly. By definition, technology is the practical application of scientific knowledge, and it is obvious that in order for businesses to remain competitive, they must adopt new technologies. The importance of new technology for organisations can be attributed to a number of factors. First, firms can improve their production and efficiency by utilising modern technologies. This is so that workers may concentrate on other duties because new technologies sometimes automate operations that were previously performed manually. Additionally, by lowering their dependency on costly manual labour, new technology can assist firms in saving money. Finally, firms can frequently access new markets and clients thanks to new technologies.
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If the annual real rate of interest is 5% and the expected inflation rate is 4%, the nominal rate of interest would be approximately 9% (5% + 4% = 9%).
What is real rate of interest?
An interest rate that has been prorated for inflation is referred to as a "real interest rate." The nominal interest rate is subtracted from the inflation rate to arrive at the real interest rate. The real interest rate is equal to the nominal interest rate less the inflation rate, to put it mathematically.
What is the inflation rate definition?
The rate of price growth over an extended period of time is known as inflation. The cost of living in a nation has increased, or prices have generally increased. These are examples of broad measures of inflation.
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Answer:
the annual dividend on the preferred stock is $60,000
Explanation:
The computation of the annual dividend on the preferred stock is shown below:
= Number of shares × par value per share × dividend percentage
= 8,000 shares × $125 × 6%
= $60,000
Hence, the annual dividend on the preferred stock is $60,000
We simply applied the above formula and the same is relevant
