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skelet666 [1.2K]
3 years ago
9

The following bonds and liabilities are given: • Bond A: A zero-coupon bond with a face value of $100 and a time to maturity of

3 years. • Bond B: A zero-coupon bond with a face value of $100 and a time to maturity of 12 years. • Liability X: A one-time liability maturing in 4 years with the present value of $100. • Liability Y: A one-time liability maturing in 8 years with the present value of $100. Suppose you have both liabilities X and Y and want to immunize your liabilities using bonds A and B. What would be the weights of two bonds in your immunizing bond portfolio? Please round your calculation to the nearest 2nd decimal. Select one: A. 30% in Bond A and 70% in bond B B. 67% in Bond A and 33% in bond B C. 50% in Bond A and 50% in bond B D. 33% in Bond A and 67% in bond B E. 70% in Bond A and 30% in bond B
Business
1 answer:
NISA [10]3 years ago
3 0

Answer:

A. 30% in Bond A and 70% in Bond B

Explanation:

There are two liabilities X and Y. The X liability is due in 4 years which can be paid when the Bond A is matured. The maturity time of Bond A is 3 years. To find this duration of the bond is calculated to find immunizing bond portfolio.

Duration = D / (1 + y)

Duration of bond A is 2.56 and Bond B is 7.24

If we invest 30% in Bond A, the liability X can be offset by the redemption and liability Y will be offset when the Bond B matures.

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Secondary data consist of ________. Group of answer choices information collected for the specific purpose at hand data that doe
fredd [130]

Answer:

information that already exists somewhere, having been collected for another purpose

Explanation:

In data collection there are two main types based in the source and the purpose for which it is collected.

Primary data collection is done mainly for a particular purpose. It is the first time data is collected for that reason.

Secondary data is one that is collected from primary sources. It is collected from data compiled for other purposes in the past.

The data is now seen as being useful for another activity so it is reused.

Examples are information from newspapers, diaries, transcripts, and financial statements

7 0
4 years ago
Cole has a cold. Although the brand-name drug is more expensive than the generic, he buys the brand-name one. Cole is familiar w
Semmy [17]

Answer:

<u>less risk</u>

Explanation:

Note: <u>The question appears to be incomplete. Another similar question has been attached for reference purpose and the answer provided herein is based upon that</u>.

It is common consumer behavior of sticking to a brand name despite another lower cost option providing the same base or constituent. Particularly in case of necessities, the law of demand i.e lower price higher demand fails as consumer would prefer being exposed to lesser risk no matter whatever be the cost.

In the given case, the consumer i.e Cole prefers going with a brand name as it provides him with a higher degree of assurance as the brand has a certain reputation attached to it which the other generic option lacks.

Secondly owing to his familiarity with the drug and it's past usage experience, he has developed brand loyalty apparently.

Thus, Cole's decision is attributable to <u>less risk.</u>

4 0
4 years ago
Nighthawk theaters has 15,000 shares of stock outstanding and projected annual free cash flows of $48,200, $57,900, $71,300, and
oksian1 [2.3K]

The current value per share of stock is $31.57.

<h3>What is the current value per share ?</h3>

The two-stage dividend model would be used to determine the current value per share of the stock. In the two-stage dividend growth model, the first stage is characterised by high growth rate. In the second stage, the high growth rate falls to a steady or normal growth rate

Total cash flows in the second stage of constant growth: (72,500 x 1.016) / (0.154 - 0.016) = 533,768.12

Now determine the present value of the cash flows:

($48,200 / 1.154) +  ($57,900 + 1/154²) + $71,300/ 1.154³ + ($72,500 / 1.154^4) + (533,768.12 / 1.154^4) = $473,495.26

Current value per share = $473,495.26  / 15,000 = $31.57

To learn more about how to determine the value of a stock, please check: brainly.com/question/15710204

#SPJ1

6 0
2 years ago
Consider using income approach to compute US GDP. Suppose there is a Mexican citizen working at a US firrm located in US, and ea
Novay_Z [31]

Answer:

According to the information in the text, the US GDP would be $500, because GDP only accounts for all the goods and services produced within the country, or under the income approach, for all the forms of income (rent, dividends, wages) earned by nationals or foreigners in domestic soil.

In this case, the Mexican citizen working in the US and earning $500 adds the same amount to US GDP of that year regardless of his nationality.

6 0
3 years ago
Which of the following categories in the portfolio matrix is a market leader and growing fast?
Maslowich

Answer:

It is Star (B)

Explanation:

Option (a) True. Star is a product with high relative market share in a high growing market . This product is full of potential but require more investment and spending in the areas of advertising,innovation and  market research in order to maintain its market leadership position. Hence, it might be cash neutral at this stage.

In the long-run, it will eventually turns to cash cow in the portfolio if we can sustain its position.

Option(b) Meteor. False. This does not exist in product portfolio matrix.

Option (c) Cash cow. False.

This product has a large relative market share in a stagnating (mature) market, profits and cash flows are expected to be high. Because of the lower growth rate, investments needed should also be low.

Hence, they  typically generate cash in excess of the amount of cash needed to maintain the business and this  ‘excess cash’ is supposed to be ‘milked’ from the Cash Cow for investments in other business units (Stars and Question Marks). Cash Cows ultimately bring balance and stability to a portfolio.

Option (d) Shiner. False .It does not exist

Option (e) Top dog. It is a product with low relative market share in a stagnant market.

8 0
3 years ago
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