Economics is the study of how evenly goods and services are distributed

Calculate the modified duration for a 10-year, 12 percent coupon rate, and semi-annual coupon payment bond with a yield to matur

Andru [333]

Answer:

Missing question "<em>If the interest rates increase by 50 basis points, What will be the percent change in price for the bond? Why? "</em>

Modified Duration = Macaulay Duration / (1 + YTM)

Modified Duration = 7.2 / (1 + 10%)

Modified Duration = 6.55

% Change in Bond Price = - Modified Duration x Change in int rates

% Change in Bond Price = - 6.55 x 0.5%

% Change in Bond Price = - 3.27%

Thus, the Interest rates and bond prices are inversely related. Hence, increase in interest rates would lead to decline in bond prices.

8 0

2 years ago

Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated

expeople1 [14]

Answer:

(a) $406,720

(b) $176,891

Explanation:

(a) (i) Interest payable on short term loan in 2020:

= 1,400,000 × 10%

= $140,000

Interest payable on long term loan in 2020:

= 1,000,000 × 11%

= $110,000

Weighted average interest rate:

= [(Interest payable on short term loan + Interest payable on long term loan) ÷ (1,400,000 + 1,000,000)] × 100

= [($140,000 + $110,000) ÷ (1,400,000 + 1,000,000)] × 100

= ($250,000 ÷ 2,400,000) × 100

= 10.42%

(ii) Avoidable interest on this project:

= (2,000,000 × 12%) + [(3,600,000 - 2,000,000) × 10.42%]

= 240,000 + 166,720

= $406,720

(b) Total capitalization cost:

= Cost to complete the construction + Avoidable interest

= $5,200,000 + $406,720

= $5,606,720

Depreciation:

= (Total capitalization cost - Salvage value) ÷ Estimated life

= ($5,606,720 - $300,000) ÷ 30

= $5,306,720 ÷ 30

= $176,891

7 0

2 years ago

g will shut down for sure when the market price is _____.A.less than $ a B.less than the marginal costC.greater than the margi

Readme [11.4K]

Answer:

B. less than the marginal cost

Explanation:

In the short run, a firm should shut down if price is less than average variable cost or marginal cost. the firm should shut down because it is making losses. When the firm shuts down, it still incurs some fixed cost such as rent but it would not incur variable cost e.g. wages.

The firm should exit the market in the long run if price is less than average total cost

5 0

2 years ago

When an Accounts Payable department improves their information system resulting in faster payments to vendors, without the Accou

weeeeeb [17]

Answer: C) suboptimization

Explanation:

The Accounts Payable department's system has been optimized yet the Accounts receivable's system has not been optimized. This means that the company as a whole is suboptimized because only one department was optimized and the other was not.

It can lead to problems such as a credit crunch because the company is paying cash faster than it is receiving it. If both departments were optimized, this wouldn't be the case as the payments and receipts would tally.

4 0

2 years ago

Charlotte Newsom worked as a cashier at a store. One day she was told to report to the manager's office, where she was accused b

Dafna1 [17]

Answer:No, because the staff members only threatened to arrest her if she left, and that she was free to leave at any time.

Explanation: False imprisonment is an intentional tort, defined under tort law as an act of restraining someone in a bounded area without any authority.

Bounded Area

- It can be a physical barrier such as locking someone where they can't get out,it involves using physical force to keep that person in that area. The bounded are is characterized by limited room for movement in any direction. If one can easily find means to escape from that area , without getting hurt this means the area is not bound but if there is a chance of getting physically harmed when one tries to escape then the area is bounded. Charlotte was in manager's office ,which has no limited movement.

A threat to harm this person or their family would also be counted as a bounded area.

A mere threat to imprison doesn't count as false imprisonment like in Charlotte was only threatened that if she leaves she will be arrested but we don't sense any sign that she will be injured if she left . The court always consider if the person had any fear that they will be injured if they left the place.

6 0

3 years ago