Answer:
Follows are the solution to this question:
Explanation:
Follows are the two ways of describing its high return:
Firstly, the mutual fund is invested in pretty unstable debt and is reciprocating with greater yields for taking a risk.
Secondly, during every decrease in bond yields, the finance kept bonds so the income on stocks exceeded this same rate of interest significantly. Remember that bond costs skyrocket as interest rates drop as well as give the purchaser an investment income. Because once interest rates are now close to zero, it's also likely that they could increase as well as the owners would then lose their money. Its high return could be due to a drop in interest rates, and not only will it not be replicated, but the low or even low return will almost definitely be followed by either a rise in interest rates.
'Paid Product Placement' or 'Paid Advertising'
Answer:
the bond worth today is $651.60
Explanation:
The computation of the amount of bond worth today i.e. present value is to be shown below:
Present value = Amount ÷ (1 + interest rate)^number of years
where,
Amount = $1,000
Interest rate = 5.5%
And, the number of years is 8
Now placing these values to the above formula
So, the worth of the bond today is
= $1,000 ÷ (1 + 0.55)^8
= $651.60
hence, the bond worth today is $651.60
Answer:
Both Common Stock and Additional Paid-In Capital in Excess of Par Value
Explanation:
The entries for rights issue will affect both accounts because:
1. The purchase of the common stock will increase the Common stock account
2. Additional Paid-in capital will be increased because it is noted in the question that the recipients of the rights issue are given the purchase of the common stock 'in excess of par value'. The excess amount will be credited to the additional PIC
Answer:
Kriste receive a better deal by $242.2
Explanation:
First, we will compare the present value for a 4-years annuity of $1,500 at 10% discount rate. So we can compare both values at the same date.
C 1500
time 4 years
rate 10% --> 0.1
We plug the values into the formula and solve
PV $4,754.80
This values is the equivalent of Ray deal. At the discount rate of 10% is the same receive 4,754.8 today or 1,500 over a 3 year period.
Kristi receive 5,000 today while Ray receive the equivalent of 4,757.8 today
We compare each one to determinate the difference:
Kriste 5,000 - Ray 4,757.8 = 242.2
Therefore, Kriste receive a better deal by $242.2
