7. Represents share in the ownership of the capital corporation. a. Bond b. Mutual fund c. Stock d. Burse 8. It is the actual interest earned by the principal in ONE YEAR. a. Effective interest b. Exact interest c. Simple interest d. Compounded interest 9. A type of annuity where the payment goes on indefinitely a. Ordinary annuity b. Annuity due c. Perpetuity d. Deferred annuity

7. Represents share in the ownership of the capital corporation. a. Bond b. Mutual fund c. Stock d. Burse 8. It is the actual interest earned by the principal in ONE YEAR. a. Effective interest b. Exact interest c. Simple interest d. Compounded interest 9. A type of annuity where the payment goes on indefinitely a. Ordinary annuity b. Annuity due c. Perpetuity d. Deferred annuity

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 13PAE

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Similar questions

Suppose Ford Motor Company issues a five year bond with a face value of 5,000 that pays an annual coupon payment of $150. What is the interest rate Ford is paying on the borrowed funds? Suppose the market interest rate rises from 3 to 4 a year after Ford issues the bonds. Will the value of the bond increase or decrease?
Consider a 3.5 percent TIPS with an issue CPI reference of 185.6. The bond is purchased at the beginning of the year (after the interest payment), when the CPI was 193.5. For the interest payment in the middle of the year, the CPI was 195.1. Now, at the end of the year, the CPI is 199.6 and the interest payment has been made.What is the total return of the TIPS in dollars? What is the total return of the TIPS in percentage?
. The rate of ______ is the ______ paid for using someone else’s ______, which is a _____ to consumers for earlier availability of durable goods such as cars, and a ______ to suppliers for capital investments nominal interest; money; cost; price; cost nominal interest; price; money; cost; cost real interest; price; money; cost; cost real interest; money; cost; price; cost
Consider a bond and a stock. The bond will pay out 100,000 at the end of year five. It will pay nothing at the end of years 1, 2, 3, or 4. The stock is for a corporation that makes profits off a patent. It will pay dividends for the next 25 years, 5,000 dollars at the end of each year. After that, the patent expires and the dividends go to zero. a) Suppose the interest rate is zero. What is the present value of each of these two assets? In other words, if you had to pay now, which is worth more? [Note: This requires calculating “present values”; you can use excel and if needed] b) The Fed’s monetary policy raises the interest rate to 2.5%. Which is worth more? c) The Fed’s monetary policy raises the interest rate to 5%. Which is worth more? d) What is the intuition for the different results in a), b) and c)? e) Do the above results suggest that, by raising the interest rate, the Fed can powerfully affect the price of assets like stocks?
George has the following income this year: salary of $52,000, interest and dividends of $1,200, gain on sale of stock of $3,000, loss on a rental house which he manages of $2,500, and ordinary loss from an investment in a limited partnership in which George makes no management decisions of $3,597. What is George's AGI? a.$52,603 b.$50,103 c.$53,700 d.$56,200
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Imagine that a local water company issued 10,000 ten-year bond at an interest rate of 6. You are thinking about buying this bond one year before the end of the ten years, but interest rates are now 9. Given the change in interest rates, would you expect to pay more or less than 10,000 for the bond? Calculate what you would actually be willing to pay for this bond.
2. The cash flows for an investment project are listed below. the firm will invest if the present value of the cash flows is positive. Year 1 −200 Year 2 100 Year 3 120 Should the firm undertake this project: a. If the interest rate is 5 percent? b. If the interest rate is 10 percent? 5. Given the following information, calculate tobin's q statistic: Let's suppose that a company has one million outstanding shares of stock, each valued at $25. Let us suppose also that the replacement cost of its physical capital stock is $18 million. a. Should this firm invest (net) in more physical capital?
2c. Mathematically derive slope of IS curve. Prove that if investment does not depend on interest rate, the slope of IS curve is infinity.
1) If a $2,000 one-year bond pays $170 in annual interest, the interest rate on this bond is (do NOT use decimal)? 2) If the interest rate changes to 19.5%, the bond price will be? 3) If the interest rate changes to 16.5%, bond price will be?
5. If you want an investment to double in3 years, what interest rate must it earn? (Hint: Solve for the interest rate)
explains interest rate and its determinants. Please explain is 3 paragraph