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3 years ago

when investors doubt the creditworthiness of a borrower, what should happen to the price and yield of a bond

Business

1 answer:

denpristay [2]3 years ago

7 0

Answer:

Prices go down, yield go up

Explanation:

As we know that there is an opposite relationship between the price of the bond and the yield that means if the creditworthiness comes in a doubt so it reduced the price of the bond and at the same time it increased the yield

So as per the given situation as the investor doubt the borrower creditworthiness so the price would fall and yield would go up

hence, the same is to be considered

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You are considering the following two mutually exclusive projects. The crossover point is _____ and Project _____ should be acce

Romashka [77]

Answer:

13.28%; B

Explanation:

Project A Project B Differential

Year 0 -$21,000 Year 0 -$21,000 0

Year 1 $7,000 Year 1 $15,000 -$8,000

Year 2 $7,000 Year 2 $5,000 $2,000

Year 3 $15,000 Year 3 $7,000 $8,000

the discount rate = 14%, the NPV is:

NPV project A = -21,000 + 7,000/1.14 + 7,000/1.14² + 15,000/1.14³ = $651

NPV project B = -21,000 + 15,000/1.14 + 5,000/1.14² + 7,000/1.14³ = $730

if the discount rate is 14%, project B should be accepted (higher NPV)

the crossover rate is the discount rate where both NPVs are equal.

we must find the IRR using an excel spreadsheet and the IRR function:

=IRR (0,-8000,2000,8000) = 13.28%

3 0

3 years ago

Digg Deep Inc. makes and leases a backhoe to Estes. Due to a defect attributable to Digg Deep's negligence, Estes is injured in

Rainbow [258]

Answer: Estes and Fortis

Explanation: Product liability suit is the region of legislation in which producers, distributors, suppliers, dealers, and others who make commodities accessible or lease products to the public are held accountable for harms those products cause.

The negligence could occur in the production operation involving low -quality materials, design negligence when the commodity is naturally hazardous or useless hence inadequate despite the care applied when producing it or marketing negligence when the important product instructions and warnings are not given prior to the usage. In this case, Dig Deep Inc. is liable to Estes and Fortis for the injury they sustained from using their product, backhoe.

5 0

3 years ago

Fred purchases a bond, newly issued by the Big Time Corporation, for $10,000. The bond pays $400 to its holder at the end of the

NNADVOKAT [17]

Answer: Option(d) is correct.

Explanation:

Given that,

Purchases a bond = $10,000

Bond pays at the end of the first, second, and third years = $400

Bond pays upon its maturity at the end of four years = $10,400

(i) Principal amount of this bond = $10,000

It is the issue price of the bond.

(ii) The coupon rate of the bond = $\frac{Interest\ Received}{Face\ value\ of\ bond}\times100$

= $\frac{400}{10,000}\times100$

= 4% per year

(iii) The term of this bond is 4 years, as it was matured after 4 years.

7 0

3 years ago

In two to three paragraphs, compare and contrast how people have historically treated natural resources and how this might chang

Maksim231197 [3]

Compare and contrast how people have historically treated natural resources and how this might change, using your new understanding of scarcity, conservation, and private property.

Answer: In the past people treated natural resources as an infinite source of wealth and commodity. But now that we know that there are physical limits to nonrenewable resources we have taken a new approach to preserve this resources by taking measures like natural resource management. A great example of this would be a private property regime where the resources benefits and duties fall under the owner(s).

I hope it helps, Regards.

8 0

3 years ago

Which of following is a stargety for using credit wisley while imporant your credit score

Sergeu [11.5K]

Uh what are the answers though

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3 years ago