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Contact [7]
3 years ago
8

Builtrite has two bond issues outstanding(sold two separate groups of bonds over the years). One issue has a 7 year maturity and

the other issue had a 12 year maturity.Both bonds are paying 4.25% annual interest. Investors only require a 3.75% return, which of the following statements is true?
a) The 7 year bond issue is riskier than the 12 year bond issue
b) Both bond issues have the same amount of risk
c) The 7 year bond price will be selling closer to par value
d) The 12 year bond price will be selling closer to par value
Business
1 answer:
baherus [9]3 years ago
4 0

Answer:

C

Explanation:

Here, we want to select which of the given options in the question is true/correct.

From the question we can observe that the two bonds have required return less than coupon rate. Hence we can conclude that, both are premium bonds. The 7-years bond however. will have closer price to par value.

Bond prices will gradually decrease as we have a decrease in years to maturity. This means that the closer the year to maturity, the lesser the value of the bond price

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3 years ago
PROBLEM: The Chicago Cubs play their home games at Wrigley Field, located in the Lakeview neighborhood of Chicago. A recent New
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Answer:

If a large Number of Lakeview residents are questioned, about 44% of them will be Club fans.

Explanation:

Reporting the probability outcome of a singular observation are usually reported as stated above, that the probability of a random sample of Lakeview resident being a club fan is 0.44%. However from a long run relative frequency approach, it requires just more Than one random sample but a large number of samples being evaluated over time.

Hence to expresa as a long run relative frequency, it could be stated as ; report gathered from many Lakeview residents, about 44% of them are Club fans.

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2 years ago
A brewery produced regular beer and a low carb "light beer". Steady Customers of the brewery buy 10 units of regular beer and 15
Svet_ta [14]

Answer:

                                                Regular     Low Carb      Total

a) Units to be produced               20              22             42

(to minimize total production cost)

b) Total production costs    $704,000   $1,150,000   $1,854,000

Explanation:

a) Data and Calculations:

                                                Regular     Low Carb

Monthly customers demand         10              15

Ratio of customers demand        40%           60%

Cost per unit                           $32,000      $50,000

Revenue per unit                    120,000      300,000

Contribution per unit            $88,000    $250,000

Total required revenue = $9,000,000

With 20 additional units of beer, total units produced = 45 (25 + 20)

To minimize production costs and generate a total revenue of $9,000,000, more of the units that cost less should be produced.  Units should be produced according to the following ratio:

                                                   Regular       Low Carb       Total

New Production and Sales units  20                   22             42

                                         

Total production cost =       $640,000         $1,100,000         $1,740,000

                                       ($32,000 * 20)       ($50,000 * 22)

Total revenue =               $2,400,000        $6,600,000     $9,000,000

                                      ($120,000 * 20)      ($300,000 * 22)

To achieve a minimum revenue of $9,500,000,

New production units                  22                   23                  45

Total production cost =     $704,000         $1,150,000        $1,854,000

Total revenue =                2,640,000         6,900,000         9,540,000

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<span>D. The product is a necessity.</span>
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