Alice Purchased a $100,000 180-Day Acme Corporation Commercial Paper When

question 107

Multiple Choice

Alice purchased a $100,000 180-day Acme Corporation Commercial Paper when it was first issued at a yield simple interest rate of 7.45%. 50 days later she sold it to Betty at a rate that would provide Betty with a return of 8.45% if Betty held it to maturity. What annual simple rate did Alice actually realize over the period that she held the Commercial Paper?

• A) 6.45%
• B) 4.71%
• C) 7.45%
• D) 6.98%
• E) 7.95%

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Definitions:

Economic Uncertainty

The unpredictability in economic conditions, which can include factors such as inflation rates, employment levels, and market volatility, affecting business and investment decisions.

Macro Uncertainty

The uncertainty that exists within the broad economy which can impact decision-making and future outcomes on a large scale.

Break-even Analysis

Break-even analysis is a financial calculation used to determine the point at which revenue equals costs, indicating no net loss or gain, and is used for decision making in business planning.

Employee Wages

Employee wages refer to the fixed regular compensation paid by employers to employees for their labor or services, typically expressed as an hourly, daily, or monthly rate.