Your father wants to buy bonds in his favorite company because he believes bonds provide stable...
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Your father wants to buy bonds in his favorite company because he believes bonds provide stable cash flows and he will profit when the company shows higher profits. Your best response to this should be: A) Bonds represent a contractual obligation to repay the stated amount, and the company will share additional cash flows if they come in better than expected. B) Bonds are risky because the company has no obligation to repay any fixed amount; they only do so because things are going well. C) Bonds represent a contractual obligation to repay the stated amount, but don't represent an ownership claim on the company's higher cash flows. D) Bonds are risky because the company can't deduct interest payments from their tax obligation. You receive a credit card solicitation in the mail offering an APR of 24.99%. The fine print reveals that card balances have interest compounded monthly. What then, is the EAR (or APY) of the credit card and why is it different from the APR? A) The APY is 28.1%. It is higher because it takes into account the deceptive advertising practices of credit card companies. B) The APY is 26.4%. It is higher because it takes into account the deceptive advertising practices of credit card companies. C) The APY is 28.1%. It is higher because it takes into account compounding of interest and the time value of money. D) The APY is 26.4%. It is higher because it takes into account compounding of interest and the time value of money. You have been offered a corporate bond trading at 112.75. If the face value of the bond is $1000, what can you assume has happened since the bond was first issued? A) Interest rates rose, and the price of the bond decreased creating a discount. B) Interest rates rose, and the price of the bond increased creating a premium. C) Interest rates declined, and the price of the bond increased creating a premium. D) Interest rates declined, and the price of the bond declined creating a discount. Your father wants to buy bonds in his favorite company because he believes bonds provide stable cash flows and he will profit when the company shows higher profits. Your best response to this should be: A) Bonds represent a contractual obligation to repay the stated amount, and the company will share additional cash flows if they come in better than expected. B) Bonds are risky because the company has no obligation to repay any fixed amount; they only do so because things are going well. C) Bonds represent a contractual obligation to repay the stated amount, but don't represent an ownership claim on the company's higher cash flows. D) Bonds are risky because the company can't deduct interest payments from their tax obligation. You receive a credit card solicitation in the mail offering an APR of 24.99%. The fine print reveals that card balances have interest compounded monthly. What then, is the EAR (or APY) of the credit card and why is it different from the APR? A) The APY is 28.1%. It is higher because it takes into account the deceptive advertising practices of credit card companies. B) The APY is 26.4%. It is higher because it takes into account the deceptive advertising practices of credit card companies. C) The APY is 28.1%. It is higher because it takes into account compounding of interest and the time value of money. D) The APY is 26.4%. It is higher because it takes into account compounding of interest and the time value of money. You have been offered a corporate bond trading at 112.75. If the face value of the bond is $1000, what can you assume has happened since the bond was first issued? A) Interest rates rose, and the price of the bond decreased creating a discount. B) Interest rates rose, and the price of the bond increased creating a premium. C) Interest rates declined, and the price of the bond increased creating a premium. D) Interest rates declined, and the price of the bond declined creating a discount.
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The detailed answer for the above question is provided below Part 1 The answer is A Bonds represent a contractual obligation to repay the stated amoun... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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