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kotegsom [21]
3 years ago
13

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require a

n “effective” annual interest rate (not a nominal rate) of 7.1225%, how much should you be willing to pay for the bond?
Business
1 answer:
Schach [20]3 years ago
7 0

Answer:

$1,061.28

Explanation:

We need to calculate the present value of the bond using the minimum effective rate of 7.1225%

First we calcualte the present value of an annuity of $80 for 10 years

C * \frac{1-(1+r)^{-time} }{rate} = PV\\

80 * \frac{1-(1+7.1225%)^{-10} }{7.1225%} = PV\\

PV = $558.72

Then we calculate the $1,000 in 10 years present value

\frac{Principal}{(1 + rate)^{time}}= PV

\frac{1,000}{(1 + 7.1225%)^{10} } = PV

PV =  $502.57

Then we add both values

$502.57 + $558.72 = $1,061.28

This will be the present value AKA market price which yields the minimun rate of 7.1225%

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An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is:
laila [671]

Answer:

First in, first out (FIFO)

Explanation:

In FIFO,  the assets produced or acquired first are sold, used or disposed of first and may be used by an individual or a corporation. So , since the newer costs are more relevant , the oldest cost won't affect the ending valuation.

5 0
3 years ago
Betty and john martinez own 220 shares of exxonmobil common stock. exxonmobil's quarterly dividend is $1.76 per share. what is t
Volgvan
The amount they will receive for this quarter is 125
6 0
4 years ago
Teller, a calendar year company, purchased merchandise from TechCom on November 1 of the current year. TechCom accepted Teller's
ikadub [295]

Answer:

Dr Interest Receivable $240

Cr       Interest Income             $240

Explanation:

The reason is that the Techcom company is lender and must account the lending as a loan.

The loan will be paid with the interest at the end of the period. The interest received at the end of December 31 would be the single month loan at the $4800 at the interest rate which is 10 percent here.

The Interest Income = $4800 * (10% interest rate * 2/12) = $240

The interes would be recorded for the two months which is $240 and accounted for as under:

Dr Interest Receivable $240

Cr       Interest Income             $240

And at the end of January 31, Teller will make the payment which would be accounted for as under:

Dr Cash $5260

Cr Interest Revenue  $120

Cr Notes Receivable $4800

Cr Interest Receivable $240

4 0
4 years ago
Vinny asks if he should force spud to finish the job. could oscar get a court order requiring spud to actually build the display
Lynna [10]
The correct answers to the questions are as follows:
1. NO, SPECIFIC PERFORMANCE ARE NOT ALLOWED IN THIS CASE BECAUSE MONEY DAMAGES ARE AVAILABLE.
When a party to a contract refuse to fulfill the terms of a contract, there are two forms of punishments that can be imposed on such an offender. It is either the court force the offender to perform the tasks expected of him or he can be asked to pay financial fines, which represents the damages incurred as a result of abandoning his work. In the question given above, money damages option is available, so Spud does not necessarily have to be forced to complete the job.

2. The correct answer is this: NO, SINCE BREACHING A CONTRACT IS USUALLY HELD TO BE A BUSINESS DECISION [NOT AN ACTION OF MORAL TURPITUDE] PUNITIVE DAMAGES ARE RARELY AWARDED IN CONTRACT CASES.
Punitive damages are damages imposed by the court of law, which are targeted at differing an offender and others from engaging in conducts that are similar to that which formed the basis of the concerned lawsuit. Punitive damages are usually awarded if the court feels that the compensatory damages awarded is not enough to compensate the injured party. Punitive damages are only awarded in special cases and usually under tort law; punitive damages generally can not be awarded in contract disputes. 

5 0
3 years ago
A(n) ________ in the liquidity of corporate bonds will​ ________ the price of corporate bonds and​ ________ the yield on corpora
Fed [463]

Answer:

An <u>increase</u> in the liquidity of corporate bonds will <u>increase</u> the price of corporate bonds and <u>decrease</u> the yield on corporate bonds, all else equal.

Explanation:

Bond liquidity refers to how quickly the bonds can be redeemed and converted to cash. This relates to the ease with which an investor can sell his bond.

High liquidity bonds are costly as they are more in demand and an attractive investment for the investors.

Thus, bond liquidity is directly related to it's price.

The yield of a bond refers to the market rate of return and represents the expectation of the bondholder with respect to rate of return.

A high price bond ( high liquidity) usually pays higher coupon rate of interest which is higher than the market rate of return on similar bonds i.e yield to maturity. This means price of a bond is inversely related to it's yield. Higher the bond price, higher the coupon payment, lower the bond yield.

3 0
4 years ago
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