An expectation that people will help those who depend on them is known as the

Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has six year

ella [17]

Answer:

a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave?

Bond Sam's price will change by -9.12%
Bond Dave's price will change by -18.05%

b. If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave?

Bond Sam's price will change by 10.26%
Bond Dave's price will change by 24.35%

Explanation:

Bond Sam

9% / 2 = 4.5% semiannual payments

6 years to maturity = 12 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 4.5%)¹² = $589.66
PV of coupon payments = 35 x 9.11858 (PV annuity factor, 4.5%, 12 periods) = $319.15

new market price = $589.66 + $319.15 = $908.81

if interest increases by 2%, present value (market value) will decrease by $91.19 ⇒ 9.12% decrease

if market interest rates decrease by 2%:

5% / 2 = 2.5% semiannual payments

6 years to maturity = 12 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 2.5%)¹² = $743.56
PV of coupon payments = 35 x 10.25776 (PV annuity factor, 2.5%, 12 periods) = $359.02

new market price = $743.56 + $359.02 = $1,102.58

if interest decrease by 2%, present value (market value) will increase by $102.58 ⇒ 10.26% increase

Bond Dave

9% / 2 = 4.5% semiannual payments

19 years to maturity = 38 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 4.5%)³⁸ = $187.75
PV of coupon payments = 35 x 18.04999 (PV annuity factor, 4.5%, 38 periods) = $631.75

new market price = $187.75 + $631.75 = $819.50

if interest increases by 2%, present value (market value) will decrease by $180.50 ⇒ 18.05% decrease

if market interest rates decrease by 2%:

5% / 2 = 2.5% semiannual payments

6 years to maturity = 12 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 2.5%)³⁸ = $391.28
PV of coupon payments = 35 x 24.3486 (PV annuity factor, 2.5%, 38 periods) = $852.20

new market price = $391.28 + $852.20 = $1,243.48

if interest decrease by 2%, present value (market value) will increase by $243.48 ⇒ 24.35% increase

6 0

3 years ago

A _____ typically provides information so that an organization can make a decision about a product, procedure, or policy.

saw5 [17]

Answer:

A proposal typically provides information so that an organization can make a decision about a product, procedure, or policy.

7 0

2 years ago

Speedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts installed in cu

Lady_Fox [76]

Answer:

Explanation:

GIving the following information:

The company applies all of its overhead costs to jobs based on direct labor-hours.

At the beginning of estimates:

Labor-hours required to support estimated output 30,000.

Fixed overhead costs $405,000.

Variable overhead cost per direct labor-hour $1.00.

A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base=

Estimated manufacturing overhead rate= (405000/30000)+1= $14.5 per direct labour hour

B)

The following information was available concerning his job:

Direct materials $619

Direct labor $113

Cost Direct labor-hours used 4

MOH= 4* 14.5= $58

Total cost job= 619 + 113 + 58= $790

C) Selling price markup percentage of 40%.

Selling price= 790*1.4= $1,106

3 0

4 years ago

With the increased usage of cell phone services, what should we expect to have happened to the price elasticity of demand for la

adell [148]

Answer:

It has become more price inelastic

Explanation:

Elasticity of demand for any good can be defined as degree of responsiveness of any good with respect to change in demand factors like price or income. Hence it signifies consumer sentiments as how will the goods demand change when there is change in price.

Highly elastic goods mean that with slight change in price there is large change in demand of good.

Highly inelastic goods mean any change in demand factor like income, price will not affect the demand of the goods.

Now going for landlines telephone. With the widespread use of mobiles phones, usage of landline phones has decreased significantly. Hence any change in price for landlines is not going to affect it demand as very few people are using it.

Using the above mentioned rational we can say that It has become more price inelastic is the most suitable answer.

8 0

3 years ago

The income elasticity of demand is the percentage change in the ________ divided by the percentage change in ________.

Kisachek [45]

The income elasticity of demand is the percentage change in the quantity demanded divided by the percentage change in income.

Elasticity refers back to the diploma of the sensitivity of a variable consistent with every other variable's trade. in this manner, you could truly diploma the alternate in the aggregate product call for with appreciation to fee adjustments. In different phrases, it is called elasticity of call for.

An example of merchandise with an elastic demand is consumer durables. those are devices that may be purchased every now and then, like a washing device or an automobile, and can be postponed if the rate rises. as an example, automobile rebates were very a success in growing car earnings by using lowering the rate.

Learn more about elasticity here: brainly.com/question/5078326

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6 0

1 year ago