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What does the term interest rate mean?
The term interest rate refers to the percentage charged on a loan or paid on an investment, expressed as an annual rate. It represents the cost of borrowing money or the return on savings and investments. Interest rates can be fixed or variable and are influenced by factors such as inflation, monetary policy, and economic conditions. Higher interest rates typically indicate a higher cost of borrowing and can affect consumer spending and investment decisions.
Discount-Mart issues 11 million in bonds on January 1 2010 They have a seven-year term and pay interest semiannually?
Discount-Mart issues $11 million in bonds on January 1, 2010. They have a seven-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 1/1/10 9,977,552 6/30/10 550,000 598,653 48,653 10,026,205 12/31/10 550,000 601,572 51,572 10,077,777 6/30/11 550,000 604,667 54,667 10,132,444 12/31/11 550,000 What is the stated annual rate of interest on the bonds? a) 11%. b) 10%. c) 5%. d) 12%. You can also get answer from onlinesolutionproviders com thanks
What is the term can be divided by?
divisible
Definition of simple interest?
Simple interest is a term that is used for quickly calculating the interest charge on a loan.
What is 5 D in a ZC?
In the context of Zero-Coupon bonds (ZC), "5 D" typically refers to a specific duration or time frame, often indicating that the bond matures in five days. Zero-Coupon bonds are debt securities that do not pay periodic interest but are sold at a discount to their face value, maturing at par value. The term "5 D" emphasizes the short-term nature of this particular investment.
Are interest rates on long term bonds usually lower or higher than interest rates on short term bonds?
Higher
Why are long term bonds sensitive interest rate changes?
Long-term bonds are sensitive to interest rate changes because their fixed interest payments are locked in for an extended period. When interest rates rise, new bonds are issued with higher yields, making existing bonds with lower yields less attractive. This leads to a decrease in the market price of long-term bonds, as investors demand a higher return to compensate for the opportunity cost of holding them. Consequently, the longer the duration of the bond, the greater the price volatility in response to interest rate fluctuations.
If there is a decline in interest rates which would you rather be holding long term bonds or short term bonds?
God
The price of a bond is equal to the sum of the interest payments and the face amount of the bonds?
This is how you make money on the bonds. You will put in the money and will receive that money and the interest on it at the end of the term.
Which bond respond more to interest rate changes short or long term bond?
Typically, long term bonds are more price sensitive than short term bonds.
Which term refers to the cost of a firm incurs for capital goods?
Interest
Are short-term bond prices are more sensitive to interest rate changes than are long-term bond prices?
No, longer term bonds are more sensitive to interest rate changes.
What are the benefits of Callable Bonds?
The benefits of callable bonds is that they are protected in the fact if interest rates drop, which is especially important if one purchases bonds for a long term period.
True or false rates of interest on bonds vary based on the term of the bond?
True. Rates of interest on bonds typically vary based on the term of the bond, with longer-term bonds generally offering higher yields to compensate for the increased risk associated with a longer investment horizon. Additionally, market conditions, inflation expectations, and the issuer's credit quality can also influence interest rates across different maturities.
What is the term used for an amount of money borrowed by the government and the interest on the money that is borrowed?
The term used for an amount of money borrowed by the government, along with the interest on that borrowed amount, is called "public debt" or "national debt." This debt arises when a government finances its expenditures by issuing securities, such as bonds, to investors. The interest paid on these securities represents the cost of borrowing.
How are bonds in the stock market defined?
by the interest rate they pay thier face value and their term
How do interest rates affect investment?
When interest rates are high, investors will consider investing in short term investments, instead of long term investments. When interest rates are low, investors will consider investing in bonds because they are safer.
