Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 13, Problem 12P
To determine
The ways of acquiring funds for investment by corporations.
Introduction:
The corporation requires funds for investing and operating in the business. There are different ways a corporation can acquire funds.
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Question 1
The savings rate is
a) the difference between gross income and disposable income.
b) the percentage reduction in taxes due to permitted deductions.
Oc) cash savings as a percentage of total net worth.
d)
the ratio of personal income to taxes paid on income.
e) personal savings as a percentage of disposable income.
(d) Suppose A&K Sound System is considering building a record studio in Cayman Islands.
(i) Assume that A&K Sound System needs to borrow money on the bond market. Why
would an increase in interest rates affect the decision of whether to build the studio?
(ii) If A&K Sound System has enough of its funds to finance the new studio without
borrowing, would an increase in interest still affect the decision about whether to
build the studio? Explain your answer.
WORKSHEET (WS) Q2 - WEEK 5
STOCKS & BONDS
Learning Task 1: Fill in the blank the correct term that describe the given sentence.
1. Periodic interest payment that the bondholder receives during the time between purchase date
and maturity date; usually receive semi-annually.
2. The rate r such that the present value of all the coupons and the face value of the bond at r
compounded per period is equal to the price of the bond.
3. A place where stocks can be bought or sold. The stock market in the Philippines is governed
by the Philippine Stock Exchange (PSE).
4. Share in the company's profit
5. Ratio of the annual dividend per share
6. A ratio of the dividends to the number of shares
7. The current price of a stock at which it can be sold
8. Fixed period of time (in years) at which the bond is redeemable as stated in the bond
certificate; number of years from time of purchase to maturity date.
9. The rate per coupon payment period; denoted by r.
10. Bonds that do not provide coupons and…
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