"Which do you prefer: a bank account that pays 5% per year (EAR) for three years or
a) An account that pays 2.5% every six months for three years?
b) An account that pays 7.5% every 18... More > months for three years?
c) An account that pays 0.5 % per month for three years?
"a) What is the expected amount of disposable income the landlord will have facing this risky situation? Is this a fair gamble?
b) What is the expected utility of the landlord in this risky... More > situation assuming he cares only about his disposable income?
c) What amount of certain income would make the landlord as happy as he would be facing the risky situation?
Pima Company acquires 50, 10%, 5 year, $1,000 Community bonds on January 1, 2008 for $51,250. This includes a brokerage commission of $1,250. Assume Community pays interest on January 1 and July 1,... More > and the July 1 entry was done correctly. The journal entry at December 31, 2008 would include a credit to< Less