Interest capitalization is defined as the unpaid interest when added to the principal amount of the loan. It increases the overall cost of the loan.
Bianca will have to pay $13.43 monthly to avoid interest capitalization.
Given that:
Principal value of loan = $2600
Maturity Time = 10 years = 120 months
Interest rate = 6.2% = 0.062
Now, to find the amount of payment by using the formula:
Total payment that is to be paid in 1 year:
Thus, the payment that Bianca has to pay is $13.43.
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Answer:
F
Explanation:
We all know that it's not true. Memory is not permanent... we don't recall everything forever.
A full learning process goes way beyond the simple memorization, our brain needs to have the knowledge put into practice over and over before we can actually remember it permanently and be able to find that information back in our mind upon request.
That's the use of the homework to be able to practice newly learned skills.
Answer:
Yanta Co. has a higher exposure to exchange rate risk than Diz Co.
The reason is that Yanta Co. does not have net inflows of euros. Instead, its euro transactions yield net outflows.
It will always be in need of euros to settle its foreign debts or obligations, unlike Diz Co. with foreign assets.
Explanation:
a) Data and Analysis:
Diz Co. has net cash inflows of euros and net cash inflows of swiss francs
Yanta Co. has net cash outflows of euros and net cash inflows of swiss francs
b) Exposure to exchange rate risk or currency risk is the financial risk arising from fluctuations in the value of the US dollars against the Euro or Swiss Francs in which Diz Co. has some foreign assets while Yanta Co. has foreign obligations.
Answer:
d. 4%.
Explanation:
The computation is shown below;
We know that
Expected stock return = Risk free rate + Beta × Market risk premium
So,
Expected stock return X is
= 2% + 1.4 × 5%
= 9%
And,
Expected stock return Y is
= 2% +.8 × 5%
= 6%
Now
Expected Portfolio return Y and risk free asset is
= Weight stock y × return Y + Weight risk-free asset × Return risk-free asset
= .5 × 6% + .5 × 2%
= 4%
