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2 years ago

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What is true regarding long-term and short-term bonds (assume they have the same par value and coupon rate)?

1 answer:

Alex2 years ago

7 0

Option C stating long term bonds have higher reinvestment risk is true

This is because the long-term bonds have higher interest rates which lead to higher coupon amounts which further leads to an increase in reinvestment value resulting in higher reinvestment risk

The answer to the second question is. TRUE

The answer to the third question is FALSE

The prices of high coupon rate bonds tend to be less sensitive to a given change in interest rate.

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What is TRUE regarding long-term and short-term bonds (assume they have the same par value and coupon rate)?

Long-term bonds have lower interest rate risk.

Short-term bonds have a higher reinvestment risk.

Long-term bonds have a higher reinvestment risk.

Short-term bonds have higher interest rate risk.

There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns decrease as the bond ratings get higher.

True

False

The prices of high-coupon bonds tend to be more sensitive to a given change in interest rates than low-coupon bonds, other things held constant.

True

False

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According to financial planners, the average retiree requires approximately 70% of their last year’s working salary (answer to #

Anna35 [415]

Answer:

Our answer is 2430798.798

Explanation:

. 70% of pre-retirement salary should be equal to the interest that we get from savings(5% of savings).

Therefore, 0.7 × 173628.4856 = 0.05×savings

==> savings = 2430798.798

3 0

3 years ago

Thornton Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes

maw [93]

Answer:

Chicken drumsticks:

pounds 6,600 - 7,230.22 = -630,22‬

market value: 6,600 - 5,478 = 1,122

Breast:

pounds 13,000 - 9037,88 = 3,962.12

market value: 13,000 - 10.790 = 2,210.00

Changing the allocation method detemriantes whether the drumstick are profitable or not thus, it should be considered which method is better suited.

Explanation:

Joint cost:

9,400 mateirals + 6,868 processing Total =

pounds to allocate cost:

$\left[\begin{array}{cccc}Product&Sales&Weight&Cost\\Drumstick&4000&0.44&7230.22\\Breast&5000&0.56&9037.8\\\\Total&9000&1&16268\\\end{array}\right]$

using market value:

$\left[\begin{array}{cccc}Product&Sales&Weight&Cost\\Drumstick&6600&0.3367&5478\\Breast&13000&0.6633&10790\\\\Total&19600&1&16268\\\end{array}\right]$

Then, we calcualte the gross margin under each method

Chicken drumsticks:

pounds 6,600 - 7,230.22 = -630,22‬

market value: 6,600 - 5,478 = 1,122

Breast:

pounds 13,000 - 9037,88 = 3,962.12

market value: 13,000 - 10.790 = 2,210.00

3 0

3 years ago

Owner made no investments in the business, and no dividends were paid during the year. Owner made no investments in the business

lyudmila [28]

Answer:

A corporation had the following assets and liabilities at the beginning and end of this year.

Assets Liabilities

Beginning of the year $ 76,500 $ 32,796

End of the year 132,000 53,460

Details a b c d

1 Beginning of the year Equity 43,704 43,704 43,704 43,704

2 Owner's investment (+) - - 45,000 35,000

3 Dividends (-) - 10,200 - 10,200

4 Net income / loss (+) 34836 45,036 -10164 10,036

5 End of the year Equity 78540 78540 78540 78540

Explanation:

Equity = Assets - Liability

Beginning of the year = 76500 - 32796 = $43,704

End of the year = 132000 - 53460 = 78540

Net income = End of year equity - (Beginning of the year Equity + Owner's Investment - Dividends)

a) Net income = 5 - (1 + 2 - 3)

= 78540 - (43704 + 0 - 0)

= 34,836

b) Dividend of 850 per month = 850 * 12 = 10,200

Net income = 5 - (1 + 2 - 3)

= 78540 - (43704 + 0 - 10200)

= 45,036

c) Net Income = 5 - (1 + 2 - 3)

= 78540 - (43704 + 45000 - 0)

= -10,164

d) Dividend of 850 per month = 850 * 12 = 10,200

Net Income = 5 - (1 + 2 - 3)

= 78540 - (43704 + 35000 - 10200)

= 10,036

Owner's investment increases equity

Dividends reduce equity

Net Income increases equity

6 0

3 years ago

The marketing team at an electronics company felt strongly that their new product needed to be available by the first quarter in

zloy xaker [14]

Answer:

different time horizon

Explanation:

The time horizon is a certain time when a planned event/process expected to be finished. A different department can have different considerations/priorities when making the ideal time horizon. In this case, the marketing team wants the product released faster(in the first quarter) to capture market share as the main consideration. But the production team who responsible for the product quality wants more time to develop the product.

3 0

3 years ago

What are mutual funds? Explain the associated risks.

ipn [44]

Answer:

A mutual fund is an investment program funded by shareholders that trades in diversified holdings and is professionally managed.

Risks:

The level of risk in a mutual fund depends on what it invests in. Stocks are generally riskier than bonds, so an equity fund tends to be riskier than a fixed income fund. Plus some specialty mutual funds focus on certain kinds of investments, such as emerging markets, to try to earn a higher return. These kinds of funds also tend to have a greater risk of a larger drop in value—yet the greater the risk, the greater the reward (or potential for higher returns).

Risks of Investing in Equity Mutual Funds The below are a few key risks involved with investing in equity funds: Volatility Risk: An equity fund invests primarily in the shares of companies listed on stock exchanges. Thus, the value of an equity fund is directly related to the performance of companies, in stocks of which it has invested.

5 0

3 years ago