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riadik2000 [5.3K]
2 years ago
5

A municipal bond has yield to maturity of 4.83 percent. An investor with a marginal tax rate of 35 percent is indifferent betwee

n this municipal bond and an otherwise identical taxable corporate bond. What is the yield to maturity of the corporate bond
Business
1 answer:
mezya [45]2 years ago
3 0

Answer: 7.43%

Explanation:

The yield to maturity simply refers to the total return that is expected on a bond as long as the bond is held till it matures.

In this case, since the investor is indifferent between this municipal bond and an otherwise identical taxable corporate bond, the yield to maturity of the corporate bond will be:

4.83% = Corporate bond YTM × ( 1- 35%)

4.83% = Corporate bond YTM × 65%

Corporate bond YTM = 4.83% / 65%

Corporate bond YTM = 0.0483/0.65

Corporate bond YTM = 7.43%

The yield to maturity of the corporate bond is 7.43%

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Answer:

You agree that test marketing could be helpful, but you point out that it may also reveal your ideas to your competitors.

Explanation:

In the give scenario the existing famous cheesy butter biscuits sales are going down. In an effort to increase the revenue of the business the head of product development has a theory that people want lighter options today, and she has recommended test marketing a lower-fat version of the biscuits at select locations in eight major cities across the United States.

This is an innovative solution to the problem and the head of product development should be encouraged to drive the test marketing.

However marketing a lower-fat version of the biscuits at select locations in eight major cities will expose the strategy to competitors. It will be better to conduct the test in a more controlled environment away from competitors.

4 0
3 years ago
How did the government help the economy? the economy of country y has experienced increased unemployment and reduced gdp for six
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Government fiscal policy measures would lower tax rates and expand the money supply.

<h3>What is the economy?</h3>
  • An economy is a region where products and services are produced, distributed, traded, and consumed.
  • It is generally understood to be a social domain that emphasizes the behaviors, discourses, and tangible manifestations connected to the creation, utilization, and management of finite resources.
  • One's culture, values, education, technological advancement, history, social organization, political structure, legal system, and natural resources are all major determinants of an economy's processes.
  • These elements determine the parameters and conditions under which an economy operates in addition to providing background and content.
  • In other words, the economic realm is a social domain made up of connected human behaviors and exchanges that cannot exist independently.
<h3>What do you mean by the government?</h3>
  • An organized community is governed by a system or group of individuals, typically a state.
  • Government often consists of the legislative, executive, and judicial branches in the case of its broad associative definition.
  • Government is a tool for making policy decisions as well as a way to enforce organizational policies.
  • A declaration of the government's guiding principles and philosophy is the equivalent of a form of constitution in many nations.

Learn more about the economy here:

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4 0
2 years ago
Argue why are Treasury bills a favorite place for financial managers to invest excess cash, as compared to other options? Your a
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Treasury bills are a favorite place for financial managers to invest excess cash because of the sizable and vibrant market in which they are traded.

<h3>What are treasury bills?</h3>

Treasury bills are referred to as short-term securities issued by the government when they require cash. In comparison to their face value, bills are offered at a discount.

As a result, the investor can choose any term from one day to a year, literally defining the desired maturity. Maximum liquidity is offered by the "T-bill" market, which may take on practically any volume of activity.

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5 0
1 year ago
15 points) Assume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowi
Masja [62]

Answer:

The Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days is $5,79,845

Explanation:

Bank Z borrow = €20 million

Spot rate 1€ = $1.13  

Convert € in to $

€20 million *1.13 = $22.60 million  

Lend $2,26,00,000 at interest rate of 6.73% for 90 days ( Assume total number of days in a year is 360)

= $2,26,00,000 + $2,26,00,000*(90/360)*6.73%

= $2,29,80,245

We need to find the euro to be repaid  = €2,00,00,000 + €2,00,00,000*7.28%*(90/360)

= €2,03,64,000

To be repaid in $:-

€2,03,64,000*1.10 = $2,24,00,400

Profit from speculating in $ = $2,29,80,245 - $2,24,00,400

                                             = $5,79,845

Therefore, The Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days is $5,79,845

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3 years ago
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Answer:

Standardized

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Firms that are purely competitive provide a standardised (same or homogenous) product. Consumers will be unconcerned about whose vendor they acquire the goods from as long as the pricing is the same.

Monopolistically competitive companies make a typical profit in the long run since entrance into the market is easy. The sort of goods supplied distinguishes oligopoly from perfect competition.

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