Earnings-at-risk pay plan will shelly most likely participate.
In part, earnings-at-risk (EAR) incentive plans are intended to improve performance by instilling dissatisfaction with base pay, which prompts increased effort directed toward performance behaviors rewarded with incentive pay.
Employee dissatisfaction with EAR plans in general, and base wages in particular, may, however, have unintended consequences that outweigh any benefits provided by these plans.
Managers who decide to implement an EAR plan should be aware of the negative reactions these plans may elicit from employees, the level of personal control employees actually have over targeted performance behaviors and the need for a level playing field that does not disadvantage newer employees.
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you invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a t-bill with a rate of return of 0.04. what percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.11?
50% and 50% of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.11.
What is an asset?
An asset is any resource that a company or other economic organisation owns or has control over. It is everything that has the potential to provide gains in terms of the economy. Assets are ownership worth that may be exchanged for cash. It includes money and other valuables that belong to an individual or a company. The two main categories of assets are tangible assets and intangible assets. There are numerous subclasses of tangible assets, including current assets and fixed assets.
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after reading the following listed articles on sox reporting for this week, provide a critique of sox. in your opinion, do the benefits of sox outweigh its cost? legislated ethics: from enron to sarbanes-oxley, the impact on corporate america by howard rockness and joanne rockness, published in the journal of business ethics. the unexpected benefits of sarbanes-oxley by stephen wagner and lee dittmar, published in the harvard business review.
Rules were established in 2002 by the Sarbanes-Oxley Act (SOX) to safeguard the public from corporate fraud and other predatory business practices.The act established a system of internal corporate checks and balances and increased corporate financial reporting transparency.
Has SOX been effective?
It is generally acknowledged that SOX improved at least two significant aspects of investor protection:
1) CEO and CFO accountability for all financial disclosures and controls related to them
2) corporate audit committees' increased professionalism and engagement.
How has the Sarbanes-Oxley Act (SOX) affected businesses' internal controls?
The act established new regulations for businesses, such as shifting responsibility for the complete and accurate handling of financial reports and establishing new auditor standards to reduce conflicts of interest.The act imposes harsher penalties on violators to discourage fraud and the misappropriation of corporate assets.
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adopter categories are classifications of individuals within a market on the basis of their innovativeness. when apple introduced the apple watch people waited in long lines before the doors opened. according to experts, those people can be categorized as:
People waited in line before the doors opened when Apple unveiled the apple watch. Those folks fall under the category of "innovators," say specialists.
Define the term innovation?The act of conceptualizing brand-new products, services, and ideas, as well as of approaching already-existing products, operations, and ideas in novel ways, is referred to as innovation. This process can be carried out by an individual or an organization.
An innovator is someone who can develop novel concepts, procedures, or goods. These people might also create updated versions of already produced goods.Process innovation is the term for adjustments made to increase a process's effectiveness. For instance, assembly lines represented a manufacturing innovation. Innovation in the business model is when processes are changed. Platforms for ride-sharing, like Uber and Grab, are one example of this.Adopter categories are divisions of people within a market based on how innovative they are. People waited in line that before doors opened when Apple unveiled the apple watch.
Thus, these individuals fit the following categories, according to experts: innovators
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the owner of a chain of supermarkets notices that there is a positive correlation between the sales of root beer and the sales of ice cream over the course of the previous year. during seasons when sales of root beer were above average, sales of ice cream also tended to be above average. likewise, during seasons when sales of root beer were below average, sales of ice cream also tended to be below average. which of the following would be a valid conclusion from these facts?
Another factor, such as the temperature outside, may have an impact on beer and ice cream sales.
The correlation coefficient measures what.
on November 11, 2022, revised.A number between -1 and 1 is the correlation coefficient, which indicates the strength and direction of a relationship between variables.To put it another way, it shows how similar two or more variables' measurements are across a datasets.
The correlation coefficient can assume what values.
The correlation coefficient can be anywhere from -1.0 to 1.0.To put it another way, the values can't be higher than 1.0 or lower than -1.0.A perfect negative correlation is represented by a correlation of -1.0, while a perfect positive correlation is represented by a correlation of 1.0.
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The default modifier used by most search engines is:
A. NOT.
B. OR.
C. ELSE.
D. AND.
if the actual economic surplus in the market represented by the graph is $3,075, what is the deadweight loss?
If the actual economic surplus in the market represented by the graph is $3,075, the deadweight loss will be $975.
The cost of market inefficiency, which happens when both supply and demand are not in balance, is known as a deadweight loss. A deadweight loss, a term mostly used in economics, refers to any deficit brought on by an ineffective resource allocation.
These elements cause goods to be overvalued or undervalued because the price of a product is not adequately reflected.
Deadweight losses may result from price floors, such as basic wage and living wage regulations, price ceilings like cost controls and rent restrictions, and taxation. A society's resource distribution could also become inefficient with a decline in commerce.
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which of the following would increase aggregate demand? group of answer choices a deficit in the government budget an increase in taxes an increase in government borrowing a surplus in the government budget a decrease in government spending previousnext
The deficit in the government budget and an increase in taxes would increase aggregate demand.
A government budget is a document prepared by a government and/or other political body that outlines the expected tax revenues and proposed spending/expenditures for the next financial year. In most parliamentary systems, budgets are submitted to parliament and often require parliamentary approval.
A government budget is a document that presents the projected revenues and expenditures of a government agency for the financial year. Government budgets often require legal approval and are subject to political pressure from competing interest groups for resources.
A budget is a spending plan based on income and expenses. In other words, it is an estimate of how much money you can make over a period of time. B. Earn and spend for a month or a year.
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the quality of a finished product does not depend on the quality of the raw materials used to make it. True or False
It is TRUE that, the quality of a finished product does not depend on the quality of the raw materials used to make it.
Raw materials are the stock or input goods that a business needs to manufacture its goods.
A few examples of raw materials are steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.
Direct raw materials are those that are used directly in the manufacturing process, such as wood for a chair.
Direct raw materials are utilized extensively throughout the production process but do not end up in the finished product.
On the balance sheet, the value of the inventory of direct raw materials is shown as a current asset.
To keep track of their inventory of raw materials, manufacturing companies take special measures. On their balance sheet, this includes three different inventory classifications as opposed to just one for non-manufacturers.
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In 2004, the number of credit card and debit card transactions were quite similar. By 2018, they had very different usage. What do you think caused the variance in growth?.
34% of Americans use credit cards for these kinds of everyday purchases. 71% of Americans who say they mostly use debit cards for everyday purchases have been in credit card debt at one point or are still in credit card debt.
Which of the following is a benefit of using a debit card?
Like a check or cash, you can easily access your money. Your account is debited for the purchase amount. If the card is reported missing before it is used, liability is limited to nothing under federal law. Overdraft and maintenance fees may apply monthly.
Debit cards and checks are not money. They are instructions to the bank for moving funds between accounts. Money is not what a credit card is. It's an identification card that lets you borrow money.
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the stock in bowie enterprises has a beta of 1.12. the expected return on the market is 12.40 percent and the risk-free rate is 3.27 percent. what is the required return on the company's stock? multiple choice 17.16% 15.33% 12.75% 13.12% 13.50%
The required return on the company's stock is 13.50 at The stock beta 1.12, Expected return on the market 12.40%, The risk-free rate 3.27%.
given data,
The stock beta = 1.12
Expected return on the market = 12.40%
The risk-free rate = 3.27%
the formula for Capital Asset Pricing Model is,
Required return = Risk free rate + Beta x (Market return - risk free rate)
substitute the above values in formula:
Required return = 3.27 + 1.12 x (12.40 - 3.27)
= 13.50
the required return on the company's stock is 13.50
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allocating service department costs provides a service firm a basis for evaluating the manufacturing costs for the company. profitability of its customers. value of its services. costs and profitability of its services.
Cost allocation provides a service firm a basis for evaluating the cost and profitability of services.
A company's profitability is determined by comparing its revenue to its outgoing costs. A more efficient organization will make more money relative to its costs than a less efficient one, which would have to spend more to make the same amount of money. Income and outlays are used to gauge profitability. Income is money made from a business's operations. A service is defined as "an act or use that a customer, business, or the government is willing to pay for." As examples, consider the work performed by barbers, physicians, attorneys, mechanics, banks, insurance companies, and others. All of society must contribute to the cost of providing public services.
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the yield to maturity on a bond is the rate of return that equates the present value of the bond's future cash flows with the bond's group of answer choices face value. market value. liquidation value. book value.
A bond's yield to maturity is the rate of return that corresponds to the bond's future cash flows at their present value known as (D) market value.
What is Market Value?The price at which an asset would trade in a competitive auction environment is known as its market value or OMV. Despite the fact that these phrases have different meanings under various standards and can have variations in some situations, market value is frequently used interchangeably with open market value, fair value, and fair market value. A bond's yield to maturity is the rate of return that corresponds to the bond's market value plus the present value of its future cash flows. The outstanding shares of a corporation are multiplied by the current market price to get market value, sometimes referred to as a market cap. If XYZ Company has 1 million outstanding shares and trades at $25 per share, its market value is $25 million.Therefore, a bond's yield to maturity is the rate of return that corresponds to the bond's future cash flows at their present value known as (D) market value.
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Correct question:
The yield to maturity on a bond is the rate of return that equates to the present value of the bond's future cash flows with the bonds is:
A. Liquidation value
B. Book Value
C. Face Value
D. Market Value
what was the motivation of record companies and radio stations in creating and targeting new demographics in the early 1970s?
increased sales and revenues was the motivation of record companies and radio stations in creating and targeting new demographics in the early 1970s
What film helped disco music earn massive crossover success with both black and white audiences?The popularity of Saturday Night Fever helped disco gain acceptability in the general public.When it was released in 1977, the movie appealed to audiences of all ages, and its soundtrack, which featured the Bee Gees and a number of obscure dance classics, went on to become the best-selling album in pop music history.In the history of salsa music, the 1970s were the most significant decade.Fania Records was successful in assembling a large number of outstanding Salsa artists and popularizing this genre through both radio and live performances, the most well-known of which were the "Fania All All-Stars" concerts.To learn more about pop music history refer,
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in periods of rising prices, under which inventory cost flow assumption does profit margin (pm) appear to be higher?
In a period of rising prices, FIFO produces the highest profit margin and the highest ending inventory.
FIFO and LIFO bookkeeping are forms used in directing stock and commercial matters including the amount of money a party has to have hampered inside the stock of produced merchandise, natural resources, parts, parts, or feedstocks.
Profit margin gauges the strength at which point a party or a trading activity forms services, basically by separating income by revenues. Expressed as an allotment, the profit border signifies how many cents of profit have existed to create each greenback of sale. Profit margins decide how much money you are making and show the overall monetary well-being of your trade.
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what is the marginal benefit of producing the third unit? number units produced total benefit total costs 0 0 0 1 100 50 2 180 110 3 250 180 4 290 270 5 310 380 multiple choice
The marginal benefit of producing third unit is 70.
What is marginal benefit?The marginal benefit of a good or service describes how much pleasure or satisfaction consumers experience when their consumption goes up or down by one unit. Marginal utility comes in three different forms. They have a marginal utility of either zero or a positive value. If you enjoy eating pizza, for example, eating two pieces will make you feel better than eating just one. It means you will receive a positive marginal utility from your pizza purchase. However, after consuming the second piece, you already feel full, and consuming the third piece would not make you feel any better. Therefore, eating pizza has no marginal benefit for you.
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To support their other promotional efforts, firms use ________blank to generate free media attention.
Companies utilize public relations to get free media attention to promote their other promotional initiatives.
How do public relations work?
The field of public relations (PR) consists of a variety of methods and approaches for controlling how news about a person or organization is presented to the general public, particularly the media. Disseminating significant company information or events, upholding a positive brand image, and turning negative situations into positive ones to lessen the fallout are its main objectives.
A company press release, news conference, journalist interviews, social media posts, or other events can all be used for PR. Every person or organization that operates in public faces the spread of information about them or their practices to the public.
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Pierre deposits $9,000 in a certificate of deposit that pays 1. 4% interest, compounded semi-annually. How much interest does the account earn in the first six months?.
The interest earned by Pierre in the first six months is $126
A certificate of deposit (CD) is a type of savings product that accrues interest on a single sum of money for a predetermined amount of time. Unlike savings accounts, CDs require that the money remain untouched over the full term to avoid penalties and lost interest. Savings accounts typically pay lower interest rates than CDs as compensation for liquidity loss. The majority of consumer financial institutions offer certificates of deposit (CDs), but each bank is free to set its own terms, rate of interest in comparison to savings and money market products, and early withdrawal fees.
Amount deposited = $9000
rate of interest = 1.4% compounded semi-annually
So, interest earned in the first six months:
= 9000*1.4/100= $126
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serie, a human resources manager at an advertising firm, is currently in the process of determining the value and worth of advertising executive positions within the agency. this is referred to as
This is referred to as job evaluation in which value determination of the advertising executive position internally is being done by Serie a human resource manager at an advertising firm.
Job evaluation is a process used by senior executive members of the company for determining the appropriate job rate for a certain position by comparing the job against other jobs within the organization. This evaluation process is generally done in the starting phase of creating a compensation system for an organization. This could be done by comparing within the agency (as historically being done) or outside the agency taking the open market and other organizations into consideration.
Point factor, factor comparison, job rankings, and job classification are some of the methods taken witing the agency by the human resource department.
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Home shopping parties may activate the risky shift or ________, in which the individual at the party may get so caught up in the party spirit that he orders products that he would normally not purchase.
Home shopping parties can lead to the risky shift or de-individuation, in which a person becomes so caught up in the party spirit that he or she orders products that they normally wouldn't buy.
de individuation is a phenomenon in which individuals act in situations in which they believe they cannot be personally identified, such as in groups, crowds, and online, in ways that appear to be impulsive, deviant, and even violent.
What kinds of de-individuation are some examples of?
People also experience de-individuation when they become involved in a hobby or activity.For instance, when they are in a mosh pit at a concert, people are frantically shaking their heads and punching the air—acts they wouldn't do if they weren't a part of a crowd.
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what would be the possible implications if the central bank(s) were unable to maintain predictable exchange and interest rates?
The possible implications if the central bank were unable to maintain predictable exchange and interest rates is an unstable economy.
A stable and predictable exchange and interest rates are good for the economy. It makes people and businesses feel more confident since it makes them think that they know the inflation rate. It causes people and businesses to be able to make long-range financial plans, invest, and spend. This makes the economy functions better,
If the central bank fails to maintain a stable and predictable rate, it will increase uncertainty and market interest rate. People and businesses would be less likely to invest, and the economy would be less stable.
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when a broker-dealer sells a security to a client and charges a commission on the transaction, it is acting as the client's:
When a broker-dealer sells a security to a client and charges a commission on the transaction, it is acting as the client's Agent
What is broker-dealer ?Without owning the securities, a broker-dealer who buys or sells securities to a customer is acting as the client's agent or broker. On this kind of transaction, the client pays a commission and the broker-dealer bears no risk. The client is assessed a markup or markdown when acting as a principal.A broker-dealer purchases stocks, bonds, and other types of securities. Then, at a price greater than the purchase price, they sell the shares to a different investor. The dealer's spread, which is the difference between the two prices, is what the broker-dealer calls the profit it makes from the transactions.
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states and mexico. mexican prices have been converted to u.s. dollars. u.s. market for strawberries price per pound quantity supplied (in millions) quantity demanded (in millions) $2 300 500 $3 350 450 $4 400 400 $5 450 350 $6 500 300 $7 550 250 $8 600 200 mexican market for strawberries price per pound quantity supplied (in millions) quantity demanded (in millions) $2 400 800 $3 450 750 $4 500 700 $5 550 650 $6 600 600 $7 650 550 $8 700 500 what is the equilibrium world price per pound? price per pound: 4 dollars what is the equilibrium quantity of exports and imports? equilibrium quantity: 6 million pounds which country will export strawberries?
The price per pound is $5 globally due to the supply and demand balance.
For $5, the US requests 350 but only obtains 450. Mexico asks for 650, but only gets 550. 100 million pounds are the equilibrium exports to Mexico at $5.
As a result, the US will ship 100 million pounds of strawberries to Mexico.
A commodity's equilibrium price is the one at which supply and demand are balanced. If the price is higher there will be more supply, and if the price is lower there will be more demand, and the markets will be out of equilibrium.
Both nations are a single market because there are no trade restrictions. The total supply and demand for each price level will be determined by adding the supply and demand in the two nations.
Price Supply Supply Supply Demand Demand Demand Market
USA Mexico Total USA Mexico Total Excess /
Deficit
2 300 400 700 500 800 1,300 -600
3 350 450 800 450 750 1,200 -400
4 400 500 900 400 700 1,100 -200
5 450 550 1,000 350 650 1,000 0
6 500 600 1,100 300 600 900 +200
7 550 650 1,200 250 550 800 +400
8 600 700 1,300 200 500 700 +600
Due to the equilibrium between supply and demand, the price per pound worldwide is $5.
The US wants 350 but only receives 450 for $5. Mexico requests 650 but only receives 550. Therefore, the equilibrium exports to Mexico at $5 are 100 million pounds. As a result, demand and supply are balanced in both nations.
Consequently, the US will send Mexico 100 million pounds of strawberries.
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if $5,000 is invested in an account at 4% annual interest compounded continuously, how much will be in the account in 8 years if no money is withdrawn?
If no money is withdrawn in 8 years there will be $6842.85
We have
A = [tex]P(1+r/n)^{nt}[/tex]
and we have,
Principal = $5000
Rate = 4%
Time = 8 years
n = 1 (compounded once a year)
A = 5000 (1 + 4/100)⁸
A = $6842.85
So there will be $6842.85 in the account.
Your principal is the sum that you get from a moneylender. The interest is the expense of getting that cash. Your month-to-month contract installment may likewise incorporate some taxes and protection. On the off chance that it does, your moneylender holds a level of your regularly scheduled installment in an escrow account. With regards to getting, the principal is the underlying size of a credit — it can likewise be the sum actually owed on a credit. In the event that you take out a $50,000 contract, for instance, the principal is $50,000. In the event that you pay off $30,000, the principal balance currently comprises the remaining amount which is $20,000.
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the following data were gathered to use in reconciling the bank account of azalea company: balance per bank $ 17,770 balance per company records 14,825 bank service charges 85 deposit in transit 2,620 nsf check 960 outstanding checks 6,610 question content area a. what is the adjusted balance on the bank reconciliation? $fill in the blank 3fb70cfaf00ffa5 1 question content area b. journalize any necessary entries for azalea company based on the bank reconciliation. if an amount box does not require an entry, leave it blank. blank - select - - select - - select - - select - - select - - select -
The adjusted balance on the bank reconciliation is $13,780. Any necessary entries for azalea company based on the bank reconciliation will be $ 1,045.
Balance as per bank = $ 17,770
Add: deposit in transit 2,620
Less: outstanding checks 6,610
The adjusted balance on the bank reconciliation is $13,780.
Necessary entries for azalea company
Account Title & Explanation DEBIT CREDIT
bank service charges $ 85
Accounts Receivable $960
CASH $1045
What exactly is a bank reconciliation?
A bank reconciliation statement summarises banking and business activity by reconciling the bank account of an entity with its financial records. Bank reconciliation statements verify that payments have been processed and cash collections deposited into a bank account.
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Oliver industries is evaluating the manufacturing process for one of their products. Oliver has determined that the process has yearly maintenance costs of $29,000, yearly operating costs of $22,000, and yearly revenues of $97,000. Two years ago, the firm spent $6,000 upgrading the equipment used to make this product, and it expects to spend $5,000 on additional upgrades three years from now. In this scenario, oliver.
Since, the Oliver industries has spent money on upgradation 2 years back, its sunk cost will be $6,000
Given info:
Maintenace cost = $29,000
Operating cost = $22,000
Revenue = $97,000
Amount spent two years ago on upgradation = $6,000
Money that has previously been spent and can't be recouped is known as a sunk cost. The sunk cost phenomenon in business is an example of the notion that one must "spend to make money." A sunk cost is distinct from potential future expenses a company might incur, such decisions on the price of products or the cost of purchasing inventories. Sunk costs are disregarded when making future business choices since they won't change regardless of the choice made. Not all fixed expenses are sunk costs, but all fixed expenses are fixed costs. Sunk costs were different in that they cannot be recovered. Technology is not a sunk cost, for example, if it may be sold again or returned again for original price.
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generally, relationships in supply chains exist because the parties ___.
Generally, relationships in supply chains exist because the parties want or need something from one another.
The most frequent reference to a relationship is to family relationships and blood relatives. A strong, close, or intimate association or acquaintance between two or more persons is referred to as an interpersonal relationship. Relationships between two variables or sets of data in mathematics and statistics are known as correlation and dependence.
The foundation of happiness and leading a fulfilling life is relationships. This is because they offer a diverse range of benefits. Through relationships, we can connect with friends and family who we can share our lives with and who can support us when we need it. They frequently make us laugh a lot, which makes us happy a lot of the time.
The three fundamental elements of all healthy partnerships are as follows: mutual respect, Mutual belief, and reciprocal affection.
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how much would real gdp increase if the government spent $15 billion instead? please provide the answer to the nearest whole billion.
The money value of the final goods and services manufactured or produced by an economy over a given period of time is referred to as the GDP in macroeconomics. There are two types: nominal and real.
How is the real increase in GDP calculated?
By dividing nominal GDP by the GDP deflator (R), real GDP is typically calculated. The deflating number, for instance, is 1.01 if an economy's prices have increased by 1% since the base year. Real GDP is determined by multiplying $1,000,000 by 1.01, or $990,099.
How do you determine how government spending affects GDP?
The spending multiplier's algebra can help us figure out how much more money the government should spend to get the economy back to full employment's potential GDP. Total Use = C + I + G + (X - M).
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the peter corporation and the sellers company have both announced ipos. you place an order for 950 shares of each ipo. one of the ipos is underpriced by $14.00 and the other is overpriced by $6.75. if you could get all of the shares you ordered for each ipo, what would your profit be?
Each IPO would cost $7250 if you could receive all of the shares you requested.
Why did you make money?The term "profit" refers to the monetary gain realized when the income from a commercial operation outweighs the expenses, charges, and taxes related to operating that enterprise.
950 shares were placed in total.
$14.00 is the under-price amount per share.
$6.75 is the overpriced amount per share.
Note: Underpricing will result in benefits at face value, while overpricing will result in losses.
Calculating overall profit:
Profit is equal to the number of shares times the underpriced share price. - (Number of shares x Per-Share Over-Price)
Profit equals ($1000 x $14.00) minus ($1000 x $6.75).
Earnings = $14,00 - 6,750
Earnings = $7,250
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if the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50 units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in either period? if so, what order size would you recommend? (round intermediate calculations to 2 decimal places.)
The manager should take advantage of the offer and order Q = 50 units during this six-month period and monthly demand is 93.33
What is monthly demand?Demand for a month (m) is equal to the monthly variation of the adjusted annual demand, which is specified as data under Monthly Demand Variation.
First six month, monthly demand = 560 / 6 = 93.33
1-6 months order size = √( 2 x A x O / C )
where O = Ordering cost per order
C = Carrying cost per order
monthly demand = √( 2 x 93.33 x 55 / 2 )
monthly demand = 71.65 or 72
7-12 months, monthly demand = 900 / 6 = 150
7-12 months order size:
monthly demand = √( 2 x A x O / C )
monthly demand = √( 2 x 150 x 55 / 2)
monthly demand = 90.83 or 91
B) First six-month period:
Monthly total cost =
(Q/2) x H + (d/Q) x S = (72 / 2) x 2 + (93.33 / 72) x 55 = $143.30
With discount of $ 10, S = $ 55 - $10 = $ 45
Monthly TC at Q = 50
= (50/2) x 2 + (93.33 / 50)x45 = $134.00
Monthly TC at Q = 100
= (100/2) x 2 + (93.33 / 100)x45 = $142.00
Monthly TC at Q = 150
= (150/2) x 2 + (93.33 / 150)x45 = $178.00
Conclusion:
Yes, the manager should take advantage of the offer and order Q = 50 units during this six-month period.
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suppose you bought a bond with an annual coupon rate of 5.4 percent one year ago for $890. the bond sells for $920 today. a. assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. what was your total nominal rate of return on this investment over the past year? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. if the inflation rate last year was 3 percent, what was your total real rate of return on this investment? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
A bond is a kind of security below which the issuer owes the holder a debt, and is obliged relying at the phrases to pay off the principal of the bond at the adulthood date as properly as interest over a special quantity of time.
The required details for bond in given paragraph
Selling price of bonds 920
Add: Annual interest 54
Total amount received 974
Less: Invested 890
Total Dollar returns 84
Total Dollar returns 84
Divide: Invested amount 890
Nominal ratee of return 9.44%
Real rate of return = (1+ Nominal rate) / (1+ Inflation rate) -1
1.0944 /1.03 - 1 = 6.25%
Bonds and shares are both securities, however the predominant distinction among the 2 is that stockholders have an equity stake in a business enterprise while bondholders have a creditor stake in a business enterprise. As creditors, bondholders have precedence over stockholders. This way they'll be repaid earlier of stockholders, however will rank behind secured creditors, within side the occasion of bankruptcy.
Another distinction is that bonds generally have a described time period, or adulthood, and then the bond is redeemed, while shares commonly stay exceptional indefinitely. An exception is an irredeemable bond, that's a perpetuity, that is, a bond with out a adulthood.
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