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Romashka-Z-Leto [24]
3 years ago
8

The bond has a coupon rate of 6.83 percent, it makes semiannual payments, and there are 4 months to the next coupon payment. A c

lean price of $1,049 and the par value is $1,000. What is the invoice price
Business
1 answer:
Kipish [7]3 years ago
3 0

Answer:

The invoice price for the bond is $1,060.38

Explanation:

Given the following:

PV= Par value = $1,000 ,

CV= Clean Price = $1,049

Coupon Rate per annum = 6.83%

To calculate the Semiannual Coupon Rate= Coupon Rate per annum/2= 3.415%

To calculate Semiannual Coupon= Semiannual Coupon Rate*PV

= 3.415% * $1,000  = $34.15

With an interest accured over 2 months, we calculate it thus:

Accrued Interest = $34.15 * 2/6 = $11.38

To calculate Invoice price:

Invoice Price = CP + Accrued Interest

Invoice Price = $1,049.00 + $11.38

Invoice Price = $1,060.38

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On January 8, Lee Co. borrows $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On April 8, Lee Co
Mumz [18]

Answer:

Interest Expense

Explanation:

If any company takes a loan from any bank or borrow from other sources for a specific time, that company has to pay a combination of principal amount and an additional expenses during the maturity period. That extra cost is called interest expense. As Lee company borrows a loan on January 8 and will pay the loan on April 8 with an interest rate, the company has to pay an interest expense of $100,000 × 6% × (90 ÷ 360) = $1,500.

8 0
3 years ago
6. Consider an economy described by the following equations:
kiruha [24]

Answer:

(a) Private saving = Y-T-C

Private saving = 5000-1000-250-0.75(5000-1000)

Private saving = 750

Public saving = T - G

Public saving = 1000-1000

Public saving = 0

National saving = S = private saving+ public saving

National saving = 750

(B)  Equilibrium interest rate = S + I

750 = 1000 - 50r

-50r = 750 - 1000

-50r = -250

50r = 250

r = 250/50

r = 5%

(c) Private saving is unchanged

Public saving = 1000 - 1250

Public saving = - 250

(d) The new equilibrium interest rate

750 (-250) = 1000-50r

500 = 1000 - 50r

- 50r = 500 - 1000

- 50r = -500

-50r = 500

r = 500/50

r = 10%

7 0
3 years ago
Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income fo
Lady bird [3.3K]

Answer:

711,300

Explanation:

Net cash generated from operating activities can be calculated by deducting and adding back the cash and non-cash items respectively from the net income for the year. Such as depreciation will be added back in net income due to it is a non-cash expense

Net Income                                                                       624,000

Depreciation and amortization                                         87,000

Decrease in accounts receivable                                     22,000

Increase in inventories                                                       (9,200)

Increase prepaid expenses                                                (8,500)

Increase in salaries payable                                              10,000

Decrease in income taxes payable                                   (14,000 )

Net cash generated from operating activities                 711,300

7 0
3 years ago
Interest rates on 3-year Treasury securities are currently 1.92%, while 10-year Treasury securities yield 5.62%. If the pure exp
FromTheMoon [43]

Answer: 7.24%

Explanation:

From the question, we are told that:

3 years treasury securities have an interest rate = 1.92%

10 years treasury security has an interest rate = 5.62%

Let the 7 year treasury security interest in 3 years be represented by z.

Based on the expectation theory

( 1+1.92%)^3 × (1 + z%)^7 = (1 + 5.62%)^10

(1+0.0192)^3 × (1 + z%)^7 = (1 + 0.0562)^10

(1.0192)^3 (1 + z%)^7 = (1.0562)^10

1.05871(1 + z%)^7 = 1.72767

Divide both side by 1.05871

(1 + z%)^7 = 1.72767/1.05871

(1 + z%)^7= 1.6319

1 + z% = 1.6319^1/7

1 + z% = 1.6319^0.1429

1 + z% = 1.0724

z% = 1.0724 - 1

z% = 0.0724

We then convert the decimal to percentage

z = 7.24%

The market believes that 7-year Treasury securities will be yielding 7.24% in 3 years .

3 0
3 years ago
The fact that the price of diamonds is higher than the price of water:
STALIN [3.7K]

Answer: D

Explanation:

Behavioral economics studies the impact of cognitive, psychological, cultural, emotional and social factors on individuals economic decisions. Behavioral economics is concerned with the extent of rationality of individuals, firms and governments. The study includes how market choices are made and the components that propel public choices.

Behavioral economics is important because it gives us an idea about how the mind of humans work. The greater the supply of a particular good, the more we use the good, the less we appreciate it. There are oceans of water and we always get water easily but there are fewer diamonds embedded and hidden in rocks which are not cheap and readily available.

8 0
3 years ago
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