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barxatty [35]
3 years ago
14

The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas Company has a bond with a coupon rate of 10 pe

rcent outstanding. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?
Business
1 answer:
motikmotik3 years ago
6 0

Answer:

Decrease in price of the bond by 16.01%

Explanation:

Find the price of the bond with the two different YTMs and compare the two prices;

<u>a.) at 7% YTM and semi-annual coupons</u>

N = 12*2 = 24

I/Y = 7%/2 = 3.5%

FV = 1,000 (use 1000 as FV if not given)

PMT = (4%/2)*1000 = 20

PV = $759.12

b.) <u>at 7% YTM and semi-annual coupons</u>

N  = 24

I/Y = (7%+2%)/2 = 4.5%

FV = 1,000 (use 1000 as FV if not given)

PMT = (4%/2)*1000 = 20

PV = $637.61

Percentage change in price = [($637.61 - $759.12)/$759.12] *100

Percentage change in price = -16.01%

There is a decrease in price of the bond by 16.01%

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Answer:

The price of goods needs to be increased.

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The best way to solve excess demand is to raise the price, in order to reach equilibrium. Once in equilibrium, the price will coordinate the quantity supplied and the quantity demanded so that they're roughly equal.

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A person's debt ratio shows the relationship between debt and net worth. the lower the ratio the
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<span>A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the better off the person is financially. </span>

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3 years ago
Billings Company has the following information available for September 2017.
kumpel [21]

Answer:

Part a

Contribution Margin = 29.95% (2 d.p)

Part b

                             Billing Company

                 CVP Income for as at September 2017

                                                      Total                      Per Unit

                                                         $                               $

Sales                                          295704                       444

Less Variable Costs                  (138084)                      (311)

Contribution                               157620                        133

Fixed Costs                                 (59850)                     89.86

Net Income                                  97770                       43.14

Part c

Billing`s break even point is 450 units

Part d

                                    Billing Company

     CVP Income for as at September 2017 - Break Even Point

                                                      Total                      Per Unit

                                                         $                               $

Sales                                           199800                       444

Less Variable Costs                  (139950)                      (311)

Contribution                                59850                        133

Fixed Costs                                 (59850)                      133

Net Income                                       0                              0

Explanation:

Part a

Contribution Margin = Contribution/Sales × 100

Therefore contribution margin is  ($444-$311)/$444 * 100 = 29.95% (2 d.p)

Part b

Sales - Variable Cost = Contribution

Net Income  =   Contribution - Total Fixed Costs                            

Part c

Break Even Point is when Billings neither makers a profit or loss.

Break Even Point ( Units) = Total Fixed Cost/Contribution per unit

Therefore Break Even Point (Units) = $59850/$133 = 450 units

Part d

The total and unit CVP should neither reflect a profit or loss at a capacity of 450 units as this is the break even point. In this case profit = nill

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Answer:

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