2 Assume the bonds below have the sameterm and principal and that the state orlocal government that issues the municipalbond has a good credit rating. Which listhas bonds correctly ordered from the onethat pays the highest interest rate to theone that pays the HIGHEST interest rate?A) Corporate bond, municipal bond, U.S.government bond •B) Corporate bond, U.S. government bond,municipal bond •C)Municipal bond, U.S. government bond,corporate bond •D)U.S. government bond, municipal bond,corporate bond

Bonds refer to the securities issued by the government or the business entities in order to raise…

Answered: Assume the bonds below have the same…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 3PA

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Similar questions

Answer these three questions about early-stage corporate finance: Why do very small companies tend to raise money from private investors instead of through an IPO? Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds? Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?
When do firms receive money from a stock sale in their firm and when do they not receive money?
Would it be wise for a young company that is growingquickly but still hasn’t achieved profitability to attemptto issue bonds as a way to expand its working capital?Why or why not?
What type of bond is issued by state and local governments? Is there any risk that state and local governments might default on these bonds? What special feature do these bonds have that make them particularly attractive to certain taxpayers?
The dollar amount of the yearly coupon payment expressed as a percentage of the face value of the bond is called the bond's : Select one: a. coupon rate b. face value rate 34 C. payment rate. d. maturity rate
Consider price quotes and characteristics for two different bonds:Bond A Bond BCoupon Payment Annual AnnualMaturity 3 years 3 yearsCoupon Rate 10% 6%Yield to Maturity 10.65% 10.75%Price 98.40 88.34At the same time, you observe the spot rates for the next three years:Term Spot (Zero-Coupon) Rates1 year 5%2 years 8%3 years 11%Demonstrate whether the price for either of these bonds is consistent with the quotedspot rates. Under these conditions, recommend whether Bond A or Bond B appears tobe the better purchase.
If you want to measure the performance of your investment in a fund, including the timing of your purchases and redemptions, you should calculate the __________. a. geometric average return b. arithmetic average return c. dollar-weighted return d. index return Don't answer by pen paper and don't use chatgpt otherwise we will give dounvote
3. Which of the following must be included in an organization’s statement of accounting profits for the statement to be of use?a. the estimated amount the organization could have earned pursuing other optionsb. the extent to which technological improvements increased productivityc. the percentages planned for reinvestment or distribution to investorsd. the period in which the profit was earned, such as a year or a quarter
Please expalin the right answer A 10-year, annual payment corporate coupon bond has an expected return of 11 percent and a required return of 10 percent. The bond's market price is: A) greater than its present value. B) less than par. C) less than its expected rate or return. D) less than its present value. E) $1,000.00.
5. Kraft is a limited partner of Johnson Enterprises, a limited partnership. As provided in the limited partnershipagreement, Kraft decided to leave the partnership anddemanded that her capital contribution of $20,000 bereturned. At this time, the partnership assets were$150,000 and liabilities to all creditors totaled $140,000.The partnership returned to Kraft her capital contribution of$20,000.a. What liability, if any, does Kraft have to the creditorsof Johnson Enterprises?b. If Johnson Enterprises had been formed as a limitedliability company, what liability, if any, would Krafthave to the creditors of Johnson Enterprises?
Which pair of phrases correctly matches the specific type of loan with the broader category it best fits? O A. Credit card Long-term loan OB. Mortgage Short-term loan O C. Line of credit Alternative financing O D. Student loan- Long-term loan
6. An investor purchases a 30-year U.S. government bond for $840. The bond’s couponrate is 10 percent and, it still had twelve years remaining until maturity. If the investorholds the bond until it matures and collects the $1000 par value from the Treasuryand his marginal tax rate is 25 percent (we assume that the bond is taxable), what willbe his after-tax (effective) yield to maturity? Make sure to show your work.

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