The Is Simple Interest? How Does Simple And Compounding Interest Differ?

 10. The interest rate used to compute the present value of a future cash flow is called the:

Answer: The Coupon Rate is a generally fixed and is known as the stated rate of a bond that determines the periodic interest payments. As stated in the textbook, the annual coupon dividen by the face value is called the coupon rate of the bond. The YTM rate of return anticipated on the bond if it is held until the maturity Date. YTM is considered a long-term bond yield expressed as an annual rate.

Moderate risk. Purchasing a bond means giving a loan to a company. “T-Bonds” are bonds issued by the U.S. Treasury and are safer than corporate bonds. (Loaning money to the government is safer than loaning money to a private business.)

1. If you are borrowing money and paying interest, would you prefer an interest rate that compounds annually, quarterly, or daily? Why? (2-4 sentences. 1.0 points)

2. Compare and contrast the nature of cash flows stemming from an investment in stock with those coming from bonds.

The coupon rate is the annual coupon divided by the face value of a bond. This differs from YTM because this shows us the percent rate that the coupon will have. It also is a more fixed rate, unlike the YTM, which increases the bond’s value. The Yield to Maturity Rate is the rate required on a bond. This helps to determine the value of a bond at a particular point in time.

An investment in a tax-exempt (municipal) bond with an interest rate of 8 percent is preferable to an investment in a taxable (corporate) bond with an interest rate of 10 percent.

a. the same amount of interest expense being recognized over the term of the bonds

The bonds can be issues with fixed interest or variable rate interest, each of which has its advantages and there disadvantages.

Before moving forward to compute the present value of these cash flows, a terminal value is required to forecast the long term value of the company after 5 years. . Following formula is used to calculate the terminal value.

13. What is the formula for the Present Value (PV) for a finite stream of cash flows (1 per year) that lasts for 10 years?

Propaganda is the specialty of influencing others to your side of the story as the right way of thinking. The propaganda forms used in today’s society end up treating people as a means rather an end. Basically, it looks at people today, as being incapable of making wise choices and researching out the matter fully. Propaganda is unavoidable and it is all over in places such as social media, newspapers, television and advertisements. In addition, the feelings that individuals have toward the activities that are taking place constantly change contingent upon their own perspective. However, being inundated with influential thoughts of outside sources on a continued basis ultimately leads to the point where the individual being used stops scrutinizing the

1. If you are borrowing money and paying interest, would you prefer an interest rate that compounds annually, quarterly, or daily? Why? (2-4 sentences. 1.0 points)

Describe the differences in interest payments and bond price between a 5 percent coupon bond and a zero coupon bond.

The duration is applicable to bonds only when these are not callable. It is because callable bonds are those that can be redeemed by the issuer prior to its maturity date. Under callable bonds, issuer has right to return