PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172340
Author: Timothy Taylor, Steven A. Greenlaw
Publisher: OpenStax
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Textbook Question
Chapter 17, Problem 21RQ
Why are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?
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Why do you think mortgage backed securities paid higher interest rates than other investments like time deposits, and US government bonds during the 2007/2008 financial crisis?
Chapter 17 Solutions
PRINCIPLES OF MICROECONOMICS (OER)
Ch. 17 - Answer these three questions about early-stage...Ch. 17 - From a firms point of view, how is a bond similar...Ch. 17 - Calculate the equity each of these people has in...Ch. 17 - Which has a higher average return over time:...Ch. 17 - Investors sometimes fear that a high-risk...Ch. 17 - What is the total amount of interest from a 5,000...Ch. 17 - If you receive 500 in simple interest on a loan...Ch. 17 - You open a 5-year CD for 1,000 that pays 2...Ch. 17 - What are the- most common ways for start-up firms...Ch. 17 - Why can firms not just use their own profits for...
Ch. 17 - Why are banks more willing to lend to...Ch. 17 - What is a bond?Ch. 17 - What does a share of stock represent?Ch. 17 - When do firms receive money from a stock sale in...Ch. 17 - What is a dividend?Ch. 17 - What is a capital gain?Ch. 17 - What is the difference between a private company...Ch. 17 - How do the shareholders who own a company choose...Ch. 17 - Why are banks called financial intermediaries?Ch. 17 - Name several different kinds of bank account. How...Ch. 17 - Why are bonds somewhat risky to buy, even though...Ch. 17 - Why should a financial investor care about...Ch. 17 - What is a mutual fund?Ch. 17 - What is an index fund?Ch. 17 - How is buying a house to live in a type of...Ch. 17 - Why is it hand to forecast future movements in...Ch. 17 - What are the two key choices U.S. citizens need to...Ch. 17 - Is investing in housing always a very safe...Ch. 17 - If you owned a small firm that had become somewhat...Ch. 17 - Explain how a company can fail when the safeguards...Ch. 17 - What are some reasons why the investment strategy...Ch. 17 - Explain why a financial investor in stocks cannot...Ch. 17 - Explain what happens in an economy when the...Ch. 17 - You and your friend have opened an account on...Ch. 17 - How do bank failures cause the economy to go into...Ch. 17 - The Darkroom Windowshade Company has 100,000...Ch. 17 - Imagine that a local water company issued 10,000...Ch. 17 - Suppose Ford Motor Company issues a five year bond...Ch. 17 - How much money do you have to put into a bank...Ch. 17 - Many retirement funds charge an administrative fee...
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Similar questions
- What is the difference between detachable stock warrants and convertible bonds?arrow_forwardWhat does it mean to say that a bond has a value less than one for its relative yield differential? What might account for such a difference?arrow_forwardJohanna is an institutional investor who is looking to “park” some of her investment funds for a short time. How would you explain to Johanna why money market instruments might be useful for her?arrow_forward
- If interest rates decline, which would you rather beholding, long-term bonds or short-term bonds? Why?Which type of bond has the greater interest-rate risk?arrow_forwardWhy is it important for people who own stocks and bonds to diversify their holdings? What type of financial institution makes diversification easier?arrow_forwardWhich type of security has interest payments that are generally exempt from federal income taxes? A. Treasury bonds B. Municipal bonds C. Mortgage-backed securities D. Commercial loansarrow_forward
- Is it possible for a one-year coupon bond to have a negative nominal interest rate? Explain, how?arrow_forwardConsider a fixed-payment security that pays $500 at the end of every year for ten years. If the rate of discount is 7 percent, find the present value of the bond? Show your work..arrow_forward
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