Answer: c. If their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond.
Explanation:
Price risk of a bond is the risk that the bond changes price or rather the degree of price volatility. Bond prices change in reaction to market interest rates with higher rates meaning lower prices and lower rates meaning higher prices.
When the market interest rates rise above the Coupon on a bond, the bond price will fall below par and when the interest rates are below the coupon, the bond will be above par.
A 5% coupon bond will be more prone to changes in prices because market interest rates are generally low and fluctuate below 10% which means that they will affect the 5% bond more than the 10% because there are better chances of rates rising above or falling below 5% than there are of 10%.
Answer:
5,500 units
Explanation:
The computation is shown below:
Given that
Need to sell the units in a month = 4,000 units
Beginning inventory = 1,000 units
Desired ending inventory = 2,500 units
So, by considering the above information, the units to be produced is
= Desired ending inventory + need to sell the units in a month - beginning inventory
= 2,500 units + 4,000 units - 1,000 units
= 5,500 units
Answer: not affecting the manager's bonus
Explanation:
Under Variable costing, fixed manufacturing overhead is not charged on inventories produced or not sold for the year which means that regardless of inventory level, the relevant inventory here when it comes to calculating operating profit is the one that was sold.
The manager's bonus will therefore not change as a result of higher inventory levels. Were this absorption costing where fixed overhead was charged to inventory that was not sold, the manager's bonus would increase because the higher inventory level would absorb more of the cost.
Answer:
A. The government lowers tax rates and undertakes a replacement of old bridges and roads
B. The government lowers tax rates and issues a partial refund of taxes that have already been paid
These 2 statements are correct explained below
Explanation:
A. The government lowers tax rates and undertakes a replacement of old bridges and roads, this statement is correct because when the government lowers tax rates it means that people have higher disposable income on their hands therefore they can spend more which increases demand, and people also invest more which increases supply, also the replacement of bridges and roads is improvement in infrastructure and this also increases supply as transportation is easier and cheaper for businesses.
B. The government lowers tax rates and issues a partial refund of taxes that have already been paid, this statement is correct because when the government lowers tax rates it means that people have higher disposable income on their hands therefore they can spend more which increases demand, and people also invest more which increases supply, also refund of taxes will increase the disposable money that people have so they can invest and consume both which will increase both supply and demand.
C. The government raises tax rates and reduces unemployment insurance payment
This is contraction fiscal policy and will do the opposite of expansionary fiscal policy, that is why this statement is incorrect.
D. The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes. This statement is wrong because lowering the interest rate is an expansionary monetary policy and not an expansionary fiscal policy.
