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Karo-lina-s [1.5K]
3 years ago
11

Which of the following bonds would have the most re-investment rate risk? a. A 20-year, 10% coupon bond. b. A 20-year zero coupo

n bond. c. A 10-year, 10% coupon bond. d. A 10-year, zero coupon bond.
Business
1 answer:
velikii [3]3 years ago
6 0

Answer:

a. A 20 year, 10% coupon bond

Explanation:

Reinvestment risk refers to the risk of earning lower rate of return than the return earned on current investments.

For example, a $1000, 6% callable bond is issued. The lender earns 6% i.e $60 per annum. Suppose the market interest rates drop to 4% and the issuer redeems these bonds. Then, the lender has to invest his proceeds at 4% and not unlike 6% in previous case.

This means, his rate of return has reduced on reinvestment. This is reinvestment risk.

Bond term is directly related to reinvestment risk. Higher the term, higher the reinvestment risk.

In the given case, 20 year 10% coupon bond bears the most reinvestment risk since the term is more. Higher the term of the bond, higher the possibility that interest rates would be lower than the interest rate at the time of purchase.

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Colombo Enterprises has a defined benefit pension plan. At the end of the reporting year, the following data were available: beg
LekaFEV [45]

Answer:

A debit to pension expense for  $10,000

Explanation:

Journal Entry for pension expenses:

Explanation                     Debit             Credit

Pension Expense            $10,000

       Cash                                             $10,000

(To record pension expenses)

Pension expenses for the year ended is comprised of the following components of pension cost.

Service Cost              14,000

Interest cost               6,000

Expected return on   (10,000)

plan assets               _______

Pension expenses  <u>  $10,000</u>

3 0
3 years ago
When the world price of some good is above the domestic price (before trade), then after trade, that nation will likely be:
Rudiy27

Answer:

EXPORT

Explanation:

If the domestic price of a country for  a good is lower than world price before trade, it mean that the country is producing that good efficiently - at a cheaper cost. After trade, the country would export the good, so that the world can produce more of the goods it produces efficiently.

If the world price is below domestic price of a country before trade, after trade, the country would import

7 0
3 years ago
When an economy is operating efficiently, the production of one more unit of a good will result in some loss of production of an
s344n2d4d5 [400]

Answer:

a) resources are limited and efficiency implies that all resources are already in use

Explanation:

If production is efficient, it means that the economy is producing on the production possibility frontier and all resources are in use.

To produce one unit of a good, the economy has to forgo producing one unit of the other good.

I hope my answer helps you.

3 0
3 years ago
With so much information and moving parts within a company, technology has made it possible for employers to monitor many aspect
Luba_88 [7]

Answer:

<em>Workplace MIS monitoring</em>

Explanation:

Employee monitoring <em>is the act of using different workplace tracking  techniques to collect data about personnel members ' practices and positions. </em>

In order to enhance efficiency and safeguard company assets,  companies track their staff. First of all, the primary purpose is to avoid  inexcusable conduct and, if the attempt fails, to reduce the conduct before  it could have an adverse impact on the company.

4 0
4 years ago
insurance companies expend a lot of effort marketing their offerings, mainly due to the fact that insurance is a(n) ________blan
Semenov [28]

Insurance companies expend a lot of effort marketing their offerings, mainly due to the fact that insurance is an unsought product that consumers don't normally think about much.

<h3>What are unsought products?</h3>

Although a buyer may feel pressured into purchasing a product they do not want, unsought commodities are frequently bought under certain circumstances, so a marketing strategy that harasses consumers into purchasing the product will be seen as immoral. A notable example of an unasked-for good is funeral services.

Unsought goods are those that consumers are unaware of or hardly ever think about purchasing and whose acquisition is motivated by a combination of risk or worry about harm and lack of desire. Examples of well-known but unpopular things are funeral services, encyclopedias, fire extinguishers, and reference books.

To learn more about unsought product, visit:

brainly.com/question/15124028

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7 0
2 years ago
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