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Marina CMI [18]
3 years ago
8

You own a bond that has a duration of 6 years. Interest rates are currently 7%, but you believe the Fed is about to increase int

erest rates by 25 basis points. Your predicted price change on this bond is ________.
Business
1 answer:
marissa [1.9K]3 years ago
7 0

Answer:

-1.18%

Explanation:

The calculation of predicted price change on this bond is given below:-

Percentage change in price = Modified duration × Change in yield

Modified duration = Duration ÷ (1 + yield)

= 6 ÷ 1.07

= 5.6075

Now, we will put the value into formula,

Percentage change in price= - 5.6075 × 0.21%

= -0.0118

= -1.18%

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If increasing numbers of consumers decide to purchase organically farmed fruit rather than conventionally farmed fruit, how is t
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2 years ago
Unearned Sales Revenue Brand Landscaping offers a promotion where a customer's lawn will be mowed 20 times if the customer pays
nikitadnepr [17]

Answer:

1.   Cash                                               $700 Dr

         Unearned Service Revenue           $700 Cr

2.   Unearned Service revenue          $35 Dr

           Service Revenue                            $35 Cr

Explanation:

1. When the payment is received in advance, the cash is received so it will be debited as cash is increasing. The service has not been provided so it is a liability of the company and the unearned service revenue will be credited as liability is increasing.

2. The cash received in advance $700 is for the service that is to be provided 20 times.

When the service is provided one time, the revenue for this has been earned so it will be recorded as a decrease to liability and an increase to revenue. So unearned service revenue will be debited and service revenue will be credited.

The revenue from one time service providing is = 700 / 20 = $35

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2 years ago
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