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zvonat [6]
3 years ago
5

A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is

CORRECT? a. The bond's current yield is less than 8%. b. If the yield to maturity remains at 8%, then the bond's price will decline over the next year. c. The bond's coupon rate is less than 8%. d. If the yield to maturity increases, then the bond's price will increase. e. If the yield to maturity remains at 8%, then the bond's price will remain constant over the next year.
Business
1 answer:
cricket20 [7]3 years ago
8 0

Answer:

If the yield to maturity remains at 8%, then the bond's price will decline over the next year.

Explanation:

When the bonds sells at a premium it means that the coupon payment is greater than the yield to maturity, which means that the income generated by the bond is greater than return required by the investor and because of this the bond sells at a premium because the investor is willing to pay more for the bond as it offers more income than its required rate of return. With a premium the bond price increases to a point where the coupon and required return become equal. When the bond has 10 years to maturity it means that it will give 10 equal payments to the investor which will be greater than the investors required return therefore the investor will be willing to pay a higher price for the bond, as the maturity decreases the number of payments which will be higher than the required return also decrease, so for example if there are 5 years to maturity then the bond will pay 5 payments that are greater than the required return so the investor will be paying a lower premium compared to when he was getting 10 payments that payed more than his required return.

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Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $19 per hour. Happy Helpers i
marshall27 [118]

Answer:

$24.28

Explanation:

Direct labor rate = $19    Payroll tax expense = 12%  Costs for sick minus days = $3

112% of $ 19 = $21.28

Fringe benefits = $3

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7 0
3 years ago
1. Choose a real or made up example of a company, and describe at least three variable costs the
Softa [21]

Answer:

Let Sanguine Wines Ltd. refer to a hypothetical company for the purpose. Following would constitute Sanguine Wines Ltd's variable costs:

  1. Raw Material or input prices: The raw material or inputs of sanguine wines limited purchases from suppliers such as dried grapes, sugar and the likes. The price of such inputs is prone to seasonal fluctuation and thus variable
  2. The performance related incentive for employees for number of bottles of wine created, would be variable cost as it would vary with the no of bottles produced.
  3. Discount allowed to distributors which varies based upon the number of bottles purchased by them.
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4 0
3 years ago
Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to all
hammer [34]

Answer:

a. predetermined overhead rate for each activity

initial concept formation  = $3,310 per Project Change

design  = $3 per Square feet

construction oversight  = $1,130 per Month

b. Classification

unit-level activities :

design

batch level activities :

initial concept formation

Product level activities :

design<em> </em>

Facility level activities :

initial concept formation

construction oversight

Explanation:

This question requires application of Activity Based Costing (ABC) method of allocating overheads.

For each overhead a rate is determined as follows :

<em>initial concept formation </em>

Predetermined overhead rate = Overhead Cost / Number of Project Changes

                                                  = $52,960/ 16

                                                  = $3,310 per Project Change

<em>design </em>

Predetermined overhead rate = Overhead Cost / Square feet

                                                  = $420,000/ 140,000

                                                  = $3 per Square feet

<em>construction oversight </em>

Predetermined overhead rate = Overhead Cost / Number of Months

                                                  = $118,650/ 105

                                                  = $1,130 per Month

<em>Classification</em>

The way the activity is to be absorbed in costing determine its classification

5 0
3 years ago
Chancellor Ltd. sells an asset with a $2.4 million fair value to Sophie Inc. Sophie agrees to make seven equal payments, each to
sattari [20]

Answer:

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Explanation:

The computation of the annual payment is shown below;

As we know that

The Present value of assets = Annual payment to be made × Present value annuity factor (i%,n)

$2,400,000 = Annual payment to be made × Present value annuity factor (7%,7)

$2,400,000 = Annual payment to be made × 5.3893

So,

The Annual payment to be made is $445,327

4 0
3 years ago
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vesna_86 [32]

Answer:

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Explanation:

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6 0
2 years ago
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