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Montano1993 [528]
3 years ago
14

Consider an investor who, on January 1, 2019, purchases a TIPS bond with an original principal of $116,000, an 10 percent annual

(or 5 percent semiannual) coupon rate, and 15 years to maturity. a. If the semiannual inflation rate during the first six months is 0.4 percent, calculate the principal amount used to determine the first coupon payment and the first coupon payment (paid on June 30, 2019). b. From your answer to part a, calculate the inflation-adjusted principal at the beginning of the second six months. c. Suppose that the semiannual inflation rate for the second six-month period is 1.0 percent. Calculate the inflation-adjusted principal at the end of the second six months (on December 31, 2019) and the coupon payment to the investor for the second six-month period.
Business
1 answer:
lakkis [162]3 years ago
6 0

Answer:

(a) $5,823.20

(b) $116,464.

(c) $5,881.43.

Explanation:

Given that,

Original principal = $116,000

Interest rate = 0.5% semi-annual

Time period = 10 years

Inflation rate = 0.4% semi-annual

(b) Inflation adjusted premium at the end of 6 months on June 30,2019:

= Original principal × Semi-annual inflation rate

= $116,000 × (1 + 0.004)

= $116,464.

Therefore, the inflation adjust principal at the beginning of six months is $116,464.

(a) First coupon payment paid on June 30,2019:

= inflation adjust principal × Interest rate

= $116,464 × 0.05

= $5,823.20

(c) Inflation adjusted premium at the end of 6 months on December 31,2019:

= Principal in June 30,2019 × Semi-annual inflation rate

= $116,464 × (1 + 0.01)

= $117,628.64.

Coupon payment on December 31,2019:

= Inflation adjusted premium × Interest rate

= $117,628.64 × 0.05

= $5,881.43.

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meriva

Answer:

The correct answer is D. $1,320,000 .

Explanation:

In this case, it should be considered that the Stone Company is just beginning to operate, so the capital at the end of the period is made up of the following:

Initial Capital: $ 1,200,000

Dividends: $ 120,000

TOTAL = $ 1,320,000

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A number of activities that are a part of a company's quality control system are listed below.
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Answer:

Following is the classification of  the costs associated with each of these activities that is prevention cost, appraisal cost, internal failure cost, or external failure cost.

(a) Product testing  - Appraisal Cost

(b) Product recall  - External Failures

(c) Product design  - Prevention cost

(d) Quality circle  - Prevention cost

(e) Inspection of goods - Appraisal Cost

Explantion cost:

Appraisal costs are costs incurred to detect defects in the poduct produce. Prevention cost are cost incurred to prevent detects in the product produce.

Internal failure costs are costs incurred to remove defects found before the customer receives the product or service. External failure costs are costs incurred to remove defects found after the customer receives the product or service.

8 0
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Worldwide Minerals Inc. wants to expand into the international market. It does not want to spend a very large amount of money fo
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Answer: Option A

                       

Explanation: In simple words, joint ventures refers to the business arrangement under which two or more independent parties join their operation for the purpose of doing business more effectively.

Worldwide can go for joint venture as it would be less costly then mergers and acquisitions since they have to buy a part of the entity also they can control the entity as per their share in it.

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On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $85,050 in assets in exchange for i
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Answer:

$3,260

Explanation:

Preparation of December statement of cash flows for Ernst Consulting

ERNST CONSULTING Income Statement

For Month Ended October 31

REVENUES

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EXPENSES

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Salaries expense $8,090

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Total expenses $14,190

Net income $3,260

($17,450-$14,190)

Therefore December statement of cash flows for Ernst Consulting will be $3,260

5 0
3 years ago
2. "Because corporations do not actually raise any funds in secondary markets, secondary markets are less important to the econo
gladu [14]

Explanation:

I disagree with this argument, it can be said that the secondary market is equally or more important than the primary market, due to the fact that it is the secondary markets that determine what will be the prices that the companies that issue bonds will sell in the primary market.

Secondary markets can also be considered to be responsible for making securities easier to sell in the primary market due to their greater liquidity.

4 0
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