a) Rank the following in order of interest rate (highest to lowest): a corporate
ID: 2900303 • Letter: A
Question
a)
Rank the following in order of interest rate (highest to lowest):
a corporate bond with annual dividends;
a "Pay Day" loan;
a bank savings account;
a 13 week certificate of deposit;
a loan to a new business;
the first credit card issued to the typical college student;
a Swiss government bond;
a bank checking account.
b)
Assume that money is needed for a business. Identify the following as either Debt or Equity financing:
A personal loan from a relative not in the business
A second mortgage on the businesses buildings
A business loan from a business partners
A business credit card
Money from a business-owned certificate of deposit
Please complete both parts. Best answer will be given to whoever answers completely and correctly. Thanks!
Explanation / Answer
Answer a ---
The order are as follow --:
student credit card
payday loan
new business loan
checking account
CD
savings account
Swiss govt bond
a 13 week certificate to deposit
Answer b
Personal Funds to Invest in Your Business or unborrowed funds is called equity. There is no fixed percentage for this equity contribution, but most lenders require at least 25 percent of the total amount needed to establish the business. The amount of equity required is also influenced by other credit factors, such as management experience and adequacy of collateral.
So the answer is A personal loan from a relative not in the business
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