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- Which of the following situations represent investment or saving? Explain. Your family takes out a mortgage and buys a new house. You use your $200 paycheck to buy stock in AT&T. Your roommate earns $100 and deposits it in his account at a bank. You borrow $1,000 from a bank to buy a car to use in your pizza delivery business. For each of the following pairs, which bond would you expect to pay a higher interest rate? Explain. A bond that repays the principal in year 2030 or a bond that repays the principal in year 2040. 2 . A bond from Coca-Cola or a bond from a software company you run in your garage.Which of the following would both make the interest rate on a bond higher than otherwise? a. the interest it pays is tax exempt and it is short term b. the interest it pays is tax exempt and it is long term c. the interest it pays is taxed and it is long term d. the interest it pays is taxed and it is short termFor each of the following pairs, which bond would you expect to pay a higher interest rate? Explain! a bond of the U.S. government or a bond of an East European government a bond that repays the principal in year 2015 or a bond that repays the principal in year 2040 a bond from Coca-Cola or a bond from a software company you run in your garage a bond issued by the federal government or a bond issued by New York State 2. Many workers hold large amounts of stock issued by the firms at which they work. Why do you suppose companies encourage this behavior? Why might a person not want to hold stock in the company where he works? 3. Economists in Funlandia, a closed economy, have collected the following information about the economy for a particular year: Y = 10,000; C = 6,000; T = 1,500; G = 1,700. The economists also estimate that the investment function is: I =3,300 –100r where r is the country’s real interest rate, expressed as a percentage. Calculate private saving, public saving,…
- For each of the following pairs, which bond would you expect to pay a higher interest rate? Explain! a). a bond of the U.S. government or a bond of an East European government b). a bond that repays the principal in year 2015 or a bond that repays the principal in year 2040 c). a bond from Coca-Cola or a bond from a software company you run in your garage d). a bond issued by the federal government or a bond issued by New York StateWhich of the following statements is correct regarding bonds? A. An increase in market interest rate would reduce a bond's yield. B. Bonds with high yields reflect high risk instruments. C. The equilibrium market price of a bond is always greater than the present value of that bond. D. A decrease in the market interest rate would result in a decrease in the present value of the bond. dont use chatgpt answerBriefly describe and explain the following investments terms. d) Government Bonds e) Stocks f) Present Value
- Describe five ways that will ensure the properly used of accumulated savings by the government.Subprime mortgages are O mortgages issued to borrowers with flawed credit histories. government-backed mortgages issued by Fannie Mae and Freddie Mac. mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. mortgages which are bundled together by financial institutions and sold to investors.Answer the question based on the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent. If the price of this bond increases to $1,250, the interest rate will Multiple Choice rise to 12.5 percent. fall to 2.5 percent. fall to 8 percent. rise to 18 percent. fall to 1.25 percent.
- Question 6 When an individual deposits her paycheck in her account at First National Bank, she is essentially: Multiple Choice lending money to borrowers in the loanable funds market. buying goods in the goods and services market. borrowing money in the loanable funds market. saving money in the goods and services market.Refer to the diagram. Given Dm and Sm, an interest rate of i3 is not sustainable because the: A) demand for bonds in the bond market will decline and the interest rate will rise. B) supply of bonds in the bond market will increase and the interest rate will decline. C) demand for bonds in the bond market will rise and the interest rate will fall. D) supply of bonds in the bond market will decline and the interest rate will rise.Assume that your rich aunt has given you $25,000 in a gift. You have come up with three ways to spend (or invest) the capital. First, you want (but do not need) a new car to make your home and social life brighter. Second, you can invest the money in the common stock of a high-tech company. Price is expected to grow by 20 percent a year, but this option is very risky. Third, you can put the money into a three-year deposit certificate with a local bank and receive 6 percent annually. The third alternative carries little risk. a. If you plan to buy the new vehicle, what is the cost of that option for the opportunity? Explain what you think in your own words.b. If you invest in the popular high-tech stock, what is the cost of that option for the opportunity? Explain what you think in your own words.
