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3 years ago

Current assets are those assets that can be converted into cash within:

Business

1 answer:

alukav5142 [94]3 years ago

4 0

Answer:

B. One year or the operating cycle, whichever is longer.

Explanation:

Current Assets are assets that can be converted into cash within a year or an operating cycle whichever is longer.

Current Assets are presented first on a balance sheet and arranged in order of liquidity.

Examples of current assets are cash ,

cash equivalents , short-term investments, accounts receivable and stock inventory.

I hope my answer helps you

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If a manager designs the shoe department in a manner that one of its private-label pairs of shoes, priced at $39.99, is position

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3 years ago

The yield to maturity on 1-year zero-coupon bonds is currently 7.5%; the YTM on 2-year zeros is 8.5%. The Treasury plans to issu

chubhunter [2.5K]

Answer:

Task a: $102.74

Task b: 2.73%

Task c: $100.44

Task d: $101.84

Explanation:

a.At what price will the bond sell?

Solution:

The price of the bond = Coupon payment for year 1 / (1+ YTM on 1-year zero-coupon bonds) + (Coupon payment for year 2 + maturity Value) / (1+ YTM on 2-year zero-coupon bonds) ^2

= $10/ (1+7.5%) + ($10 + $100)/ (1+8.5%) ^2

=$9.30 +$93.44

=$102.74

b. What will the yield to maturity on the bond be?

Solution:

We have following formula for calculation of bond’s yield to maturity (YTM)

Bond price P0 = C/ (1+YTM) + (M+C) / (1+YTM) ^2

Where,

P0 = the current market price of bond =$102.74

C = coupon payment = 10% of $100 = $10

YTM = interest rate, or yield to maturity =?

M = value at maturity, or par value = $ 100

Now we have,

$102.74 = $10/ (1+YTM) + $110 / (1+YTM) ^2

YTM = 2.73%

(c) If the expectations theory of the yield curve is correct, what is the market expectation of the price that the bond will sell for next year?

Solution

Under expectation theory

ft = E(rt )

Therefore (1+ ft) = (1.085) ^ 2 / 1.075 = 1.0951

Or ft = E(rt )= 1.0951 -1 = 0.0951 or 9.51%

By using this theory the bond price on year,

P = $110/1.0951 = $100.44

(d) Recalculate your answer to (c) if you believe in the liquidity preference theory and you believe that the liquidity premium is 1.5%.

Solution

If the liquidity premium is 1.5%,

Then ft = E (rt) + L

Where L is liquidity premium = 1.5%

Therefore,

E(rt) = ft - L = 9.51% - 1.5% = 8.01%

And price of the bond

P = $110/1.0801 = $101.84

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