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riadik2000 [5.3K]
3 years ago
14

Paul's Dogs Corp. has 9 percent coupon bonds making annual payments with a YTM of 8.5 percent. The current yield on these bonds

is 8.85 percent. How many years do these bonds have left until they mature
Business
1 answer:
Setler79 [48]3 years ago
4 0

Answer:

4.17 years

Explanation:

For Bond,

Let's take Bond Par Value = $1,000

Coupon Rate = 9%

YTM = 8.5%

Current Yield = Annual Dividend/Current Price

0.0885 = 90/Bond Price

Bond Price = $1,016.95

Calculating Time left to Maturity,

Using TVM Calculation,

T = [FV = 1000, PV = 1016.95, PMT = 90, I = 0.085]

T = 4.17 years

So,

Time left to Maturity = 4.17 years

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Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where th
ivolga24 [154]

Answer:

c. can improve its allocation by producing more of one good and less of the other.

Explanation:

Production possibility curve shows all the combinations not two products that can be produced by an economy with a given level of resources. When more of one good is produced, less of the other is produced.

When the marginal benefit of the goods are not equal to the marginal cost, the economy can find a balance where the benefits of producing bother goods exceeds their cost.

This can be done by producing more of one good and less of the other.

7 0
3 years ago
Imagine that you have been a production operator manager for two years at a large gas distibution company. Recently, your direct
Novay_Z [31]

Answer:

d.

Explanation:

Based on the provided choices, the sentence that must be included would be "This restructure will involve partitioning units and redistributing our customers to new developers. OP and SG will have dotted line relations to PPR and SLG." This sentence clearly explains the entire restructuring process and the reason for doing so, while at the same time letting employees know that their departments (hence the employees) will still have a relationship to the new units and developers, therefore keeping their jobs.

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3 years ago
Before tuberculosis was understood to be a communicable disease, and before the discovery of antibiotics to treat it, a major ou
uranmaximum [27]
<span>Reduction in a nation's labor force would long-run aggregate supply curse to the left, representing a reduction in labor. This would tend to drive up labor costs over time. Presumably, the demand curve would remain static in the short-term. However, such a reduction would also impact the nation's consumption and thereby reduce the demand for products. This would in turn drive a decreased demand for labor (leftward shift) and apply downward pressure to wages. The answer to this depends on whether the questions is regarding short-term, medium-term or long-term labor supply/demand curve.</span>
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3 years ago
Calculate the risk-adjusted asset base for a bank with: a. Cash of $20 million, 0% b. Gen. Obligation municipal security of $100
Ulleksa [173]
This is what i found  Answer 1
Risk-Adjusted Asset Base
The calculation of the risk-adjusted asset base for a bank is as below-
Risk-adjusted asset = (Cash × 0%) + (municipal security × 20%) + (home mortgages × 50%) + (Commercial loans × 100%)
= (20 × 0%) + (100 × 20%) + (500 × 50%) + (300$ × 100%)
= 0 + 20 + 250 + 300
= $570 million
The outcome shows that the risk-adjusted or weighted asset based for the bank will be $570 million.
Tier1 and Tier 2 Capital:
If the bank has no off-balance sheet activity then minimum required level of Tier 1 and Tier 2 capital will be-
Tier 1 capital = Risk-weighted asset × 4%
= $570 × 4%
= $22.8 million
Tier 2 capital = Maximum of 1.25% of risk-weighted asset
= $570 × 1.25%
= $7.125 million
Total capital = $22.8 + $7.125 => $29.925 million
The outcomes indicate that the minimum required level of Tier1 and Tier 2 capital is $22.8 million and $7.125 million for the bank.
Bank Comply with Capital Requirements:
If the bank has Tier 1 capital of $25 million and Tier 2 capital of $15 million then it will comply with its capital requirements of $29.925 million. It is because in this situation, total capital of bank is $37 million that is higher than the above calculated capital of $29.925 million.
Impact of off-Balance Sheet Activities on Capital Requirements
The addition of off-balance sheet activities might increase the capital requirement of the bank. It is because an off-balance sheet items is a financial contract that can create credit loss for the company due to credit risk. So, in case of adding off-balance sheet activities, a bank will require more capital to cover credit loss. Along with this, it can also increase the minimum ratio of capital to risk-weighted assets from 8% and in that situation; the bank will need more capital (Carmichael & Graham, 2012).
Answer 2
Probability of Repayment and Risk Premium
A).
If the rate on a one-year treasury bill is 6% and in case of loan default, no payments are expected on financial securities then the probability of repayment and the risk premium on 1 year AA-rated loan yielding 9 percent will be-
Probability of Repayment:
The following formula can be useful to determine probability of repayment.
P = (1 + I) / (1 + k)
Where,
I = 6%
k = 9%
Then, ...you have $2.19 left :D
 
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