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3 years ago

If current market interest rates rise, what will happen to the value of outstanding bonds?

Business

1 answer:

Flauer [41]3 years ago

3 0

Answer:

The correct answer is 4. If current market interest rates rise, the value of outstanding bonds will fall.

Explanation:

The economics of financial investment of bonds indicates that if the value of the interest rate rises, said rise implies a virtual increase in the risk of the bond, that is, it pays more interest because it is more risky to invest in it.

Therefore, in the event of an interest increase, the price of the bonds will fall. On the contrary, a lower interest rate infers a greater security of the financial asset, with which the lower the interest rate, the higher the value of the bond.

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Whiteville Co. can further process Product B to produce Product C. Product B is currently selling for $45 per pound and costs $3

Annette [7]

Answer:

In this case, the differential cost os $18.

Explanation:

<u>The differential cost is the increase in unitary or total production value in two or more steps of the decision-making process. </u>In this case, the unitary cost of product B is not a differential cost. It would remain constant in both products, but, the additional $18 is a cost incurred only in product C.

In this case, the differential cost os $18.

5 0

2 years ago

Suppose you sell a fixed asset for $112,000 when its book value is $112,000. If your company's marginal tax rate is 39 percent,

Dmitriy789 [7]

Answer:

The after tax cash flow will be $112,000.

Explanation:

The market value of the fixed asset is given at $112,000.

The book value of the same asset is $112,000.

The marginal tax rate is 39%.

The after tax cash flow will be

= $Book\ value\ +\ (Market\ value\ -\ book\ value)\ \times\ (1\ -\ t)$

= $\$ 112,000\ +\ (\$ 112,000\ -\ \$ 112,000 )\ \times\ (1\ -\ 0.39)$

= $\$ 112,000\ +\ (0\ \times\ 0.61)$

= $112,000

8 0

2 years ago

Brad and Jeevan would like to start a new business selling a product new to the U.S. market. Brad and Jeevan have done a conside

Fynjy0 [20]

In order to avoid losing personal assets, Brad and Jeevan should organize their firm as a <u>Corporation</u>.

<h3>Why would a corporation be best?</h3>

A corporation is considered a separate entity from its owners for tax and legal purposes.

This means that if Brad and Jeevan were to make their firm a corporation, they would not have to worry about their personal assets being seized in the case that the firm suffers losses.

In conclusion, they should create a corporation.

Find out more on corporations at brainly.com/question/1624317.

5 0

2 years ago

The common stock of the P.U.T.T. Corporation has been trading in a narrow price range for the past month, and you are convinced

RoseWind [281]

Answer:

$3.86

Explanation:

According to the scenario, computation of the given data are as follow:-

Current price of stock (S0) = $110

Call option at exercise price X is $110

Three month call option price (C) = $6.53

Risk free interest rate = 8%

Price of the three month P.U.T.T option (P) = C - S0 + PV (X)

= $6.53 - $140 + $140 ÷ (1+8%)^(3÷12 )

= $6.53 - $140 + $140 ÷ (1+8%)^.25

= $6.53 - $140 + $140 ÷ 1.019427

= $6.53 - $140 + $137.33

= $3.86

5 0

3 years ago

While preparing its year 3 financial statements, Dek Corp. discovered computational errors in its year 2 and year 1 depreciation

expeople1 [14]

Answer:

Dek Corp.

The amounts should be adjusted to retained earnings and presented for net income in Dek’s year 3 and year 2 comparative financial statements are:

Year Retained earnings Net income

year 2 ($50,000) $150,000

year 3 -- 180,000

Explanation:

a) Data and Calculations:

Years 1 and 2 net income overstated by $25,000 each.

Year 2 Year 1

Retained earnings, 1/1 $700,000 $500,000

Net income 150,000 200,000

Retained earnings, 12/31 $850,000 $700,000

b) With the above amounts, the retained earnings of Year 2 are adjusted by a negative $50,000 value, representing the overstated net income for years 1 and 2. This will reduce Year 2's ending retained earnings to $800,000 ($850,000 - $50,000). The second amount will simply state the net income for year 3 as it is.

5 0

3 years ago