10-31-2007, 02:03 PM
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#1 |
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Greenhorn
Join Date: Jul 2006
Posts: 10
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Stocks and Bonds?
Frank who wants to set up a lemonade stand, which costs $50 to do. He only has $30 in savings, he she asks his parents for help in financing his venture. If he borrows $20 from his parents and offers to pay them $25 in one year, this is the same as:<br /><br />1. Issuing a bond with a 25% interest rate<br />2. Issuing a stock worth 40% of the business<br />3. Issuing a bond with a 20% interest rate<br />4. Issuing a stock worth 50% of the business<br />
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10-31-2007, 02:03 PM
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#2 |
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Greenhorn
Join Date: Jul 2007
Posts: 20
Rep Power: 5 |
Stocks and Bonds?
1. Issuing a bond with a 25% interest rate
Stocks mean investment, but bonds mean borrowing. The question asks directly about borrowing. So, it's bond. The interest is $5 from $20 and it's 25% (5/20) |
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10-31-2007, 02:03 PM
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#3 |
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Greenhorn
Join Date: Jul 2006
Posts: 14
Rep Power: 0 |
Stocks and Bonds?
Issuing a bond with a 25 % interest rate. He's paying 5 dollars in interest so 5/20 is .25, and hence 25 %
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