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Determine the real (inflation-free) rate of return for each bond.
Suppose you have $10,000 cash that you want to invest. Normally, you would deposit the money in a savings account that pays an annual interest rate of 6%. However, you are now considering the possibility of investing in a bond. Your alternatives are either a nontaxable municipal bond paying 9% or a taxable corporate bond paying 12%. Your marginal tax rate is 30% for both ordinary income and capital gains. You expect the general inflation to be 3% during the investment period. You can buy a high-grade municipal bond costing $10,000 and that pays interest of 9% ($900) per year. This interest is not taxable. A comparable high-grade corporate bond is also available that is just as safe as the municipal bond, but that pays an interest rate of 12% ($1,200) per year. This interest is taxable as ordinary income. Both bonds mature at the end of year 5.
(a) Determine the real (inflation-free) rate of return for each bond.
(b) Without knowing your MARR, can you make a choice between these two bonds?
The consequences of price control measures are largely linked to changes in the level of output and the elasticities of supply and demand. Moreover, the imposition of statutory prices has not been much effective in achieving the intended objective..
1.the three functions of money area.unit of account double coincidence of wants and barterb.unit of account double
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Over the past decade, many media articles have discussed the topics of "Coutsourcing" and "Cemerging markets", voicing concerns about U.S. deficits and debt and the impact on the U.S. dollar
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Should price rise for products in demand be allowed during extreme times of demand.
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Due to an increase in her rent, Isa needs to cut back her spending on other items. Which type of goods will Isa consume less of.
Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $250.
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When McDonald's Corp. reduced the price of its Big Mac by 75 percent if customers also purchased French fries and a soft drink, The Wall Street Journal reported that the company was hoping the novel promotion would revive its U.S. sales growth.
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