The stockholder and the bondholder.

Question

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Answer 1

Question

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

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Students have asked these similar questions

Carly wants to buy and operate an ice-cream truckbut doesn’t have the financial resources to start thebusiness. She borrows $20,000 from her friendFreddie, to whom she promises an interest rateof 7 percent, and gets another $30,000 from herfriend Sam, to whom she promises a third of herprofits. What best describes this situation?a. Freddie is a stockholder, and Carly is abondholder.b. Freddie is a stockholder, and Sam is abondholder.c. Sam is a stockholder, and Carly is a bondholder.d. Sam is a stockholder, and Freddie is abondholder.

When the government raises taxes on businesses, the price of bonds _______ and the yield on bonds ________, all else equal. falls; falls rises; rises falls; rises rises; falls

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 term

Answer 2

Question

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

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Answer 3

Question

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

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Answer 4

Question

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

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Answer 5

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

Answer 6

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

Answer 7

Chapter 18, Problem 1QQ

To determine

The stockholder and the bondholder.

Answer 8

Expert Solution & Answer

Answer to Problem 1QQ

Option ‘d’ is the correct answer.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (d):

In the given scenario, D is the stock holder and Jenny is the bondholder. Both Dan and Jenny are creditors to Forest. However, the amount borrowed from Jenny owes a repayment with interest at some future date and is similar to investing in a bond. The amount that is given by Dan makes him eligible for the future payments for which he promised by Forest. This is similar to investing in a stock. Thus, option (d) is correct.

Option (a):

In the given example, Jenny is not the stockholder and Forest is not the bondholder. Jenny is the actual bondholder while Forest is the debtor. Thus, option (a) is incorrect.

Option (b):

In the given example, Jenny is not the stockholder and Dan is not the bondholder. Jenny is the actual bondholder while Dan is the stockholder. Thus, option (b) is incorrect.

Option (c):

In the given example, Dan is the stockholder. However, Forest is not the bondholder. Forest is the debtor. Thus, option (c) is incorrect.

Answer 12

Economics Concept Introduction

Bond: Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Stock: Stock refers to the share of the company which gives profit or loss to the person who holds it.

Answer 13

Ch. 18 - Prob. 1QQ Ch. 18 - Prob. 2QQ Ch. 18 - Prob. 3QQ Ch. 18 - Prob. 4QQ Ch. 18 - Prob. 5QQ Ch. 18 - Prob. 6QQ Ch. 18 - Prob. 1QR Ch. 18 - Prob. 2QR Ch. 18 - Prob. 3QR Ch. 18 - Prob. 4QR

The stockholder and the bondholder.

The stockholder and the bondholder.

Answer to Problem 1QQ

Explanation of Solution

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Chapter 18 Solutions