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zubka84 [21]
3 years ago
8

A 30-year zero coupon bond with a face value of $5,000 is currently selling for $1,156.88 and has a market rate of interest of 5

%. Using the bond's modified duration, what is the approximate change in the price of the bond if interest rates fall to 4.25%
Business
1 answer:
daser333 [38]3 years ago
5 0

Answer:

Price will increase by $277.58

Explanation:

Market rate of Interest of a zero coupon bond can be determined by following formula

Market Rate of Interest = [ ( F / P )^(1/30) ] - 1

4.25% = [ ( $5000 / P )^(1/30) ] - 1

0.0425 + 1 = ( $5000 / P )^1/30

( 1.0425 )^30 = (( $5000 / P )^1/30)^30

3.4856 = $5000 / P

P = $5,000 / 3.4856

P = $1,434.46

Now Calculate the change in Price

Change in price = $1,434.46 - $1,156.88 = $277.58

Price will increase by $277.58

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c. fewer government regulations

Explanation:

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A company’s Factory Overhead T-account shows total debits of $624,000 and total credits of $646,000 at the end of the year.
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Answer:

The journal entry is

Dr Cost of sales ---------------$22,000

Cr Factory overhead---------$22,000.

Explanation:

At the end of the year:

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The difference is $646,000 - $624,000 = $22,000

This $22,000 will be the balance at the beginning of the following year.

So the journal entry to close the balance in the Factory overhead account to cost of goods sold is:

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The demand curve of a monopolistically competitive firm A) is horizontal because the firm must cut its price to sell more. B) is
melisa1 [442]

The demand curve of a monopolistically competitive firm A) is horizontal because the firm must cut its price to sell more.

  • The demand curve of a firm that is perfectly competitive is horizontal at the market price.
  • As a result, every unit sold will result in it receiving the same price.
  • The difference in total revenue from selling one more unit at the constant market price is the marginal revenue that the company receives.
  • A monopolistically competitive firm's perceived demand curve slopes downward, indicating that it sets prices and selects a mix of quantity and price.

Why is the demand curve in monopolistic competition more elastic than a monopoly?

Firm's demand curve under monopolistic competition is more elastic than under monopoly because of availability of close substitutes under monopolistic competition.

Learn more about demand curve brainly.com/question/13131242

#SPJ4

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