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Wewaii [24]
3 years ago
12

Consider a $1000 bond that pays an annual interest rate of 8% and matures in two years. The prevailing interest rate has dropped

to 4%. Choose from the numbers to create the equation that will calculate the current price of this bond. Note that this bond will make two payments. Please place the earlier one on the left side of the plus sign.
Business
1 answer:
Anika [276]3 years ago
7 0

Answer:

Current bond price = 80 / (1+0.04)^1 + 1080 / (1+0.04)^2

Explanation:

The Coupon payment = 0.08 * 1000 = 80

The Payment at EOY 1 = 80

The Payment at EOY 2 = 80 + 1000 = 1080

market interest rate = 4%

Current bond price = 80 / (1+0.04)^1 + 1080 / (1+0.04)^2

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"A customer owns 1,000 shares of XYZZ stock, purchased at $40 per share. The stock is now at $45, and the customer has become ex
Alika [10]

Answer:

Sell 1,000 shares of XXYZZ and buy 10 XYZZ put contracts

Explanation:

In the stock markets a bullish trend is when the price of the stock increases, while a bearish market is when the stock price decreases.

In this scenario the customer owns 1,000 shares of stock XYZZ stock that have been in a bullish trend rising from $40 to $45.

Usually a bullish trend is followed by a bearish trend.

If the customer is sure there will be a bear on the stock them he should sell or make a put trade.

On sale of the 1,000 shares the customer will make $5 per share, and enter a put option since the market is going bearish.

7 0
3 years ago
On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $57,000. Alan made the appropriate year-end
just olya [345]

Answer:

Amount paid to record is $58,900

Explanation:

In this question, we are asked to state the Journal entry as of March 1.

Please check attachment for tabular explanation

Kindly note that 360 is used as the number of days in a year

4 0
3 years ago
A company's competitive advantage will not endure for long when that competitive advantage can be
Tanya [424]
Quickly or easily duplicated by other companies
4 0
3 years ago
Using the following accounts and a predetermined overhead rate of 50% of direct labor cost, determine the amount of applied over
sveta [45]

Answer:

The amount of applied overhead is $41,500

Explanation:

Given,

Beginning WIP -$ 23,000  

Direct materials - $69,000

Ending WIP - $ 47,220

Beginning FG - $6,400

Ending FG - $169,280

By using the above information, it is easy to calculate the direct labor. Through which , the computation of applied overhead become easy.

The formula for computing direct labor is as follows:

1.50 × Direct labor + Beginning WIP + Direct materials = Ending WIP + Ending FG

1.50 × Direct labor + $ 23,000  +$69,000  = $ 47,220 + $169,280

1.50 × Direct labor + $ 92,000 = $ 216,500

1.50 × Direct labor = $ 216,500 - $ 92,000

1.50 × Direct labor  = $124,500

Direct labor = $124,500 ÷ 1.50

Direct labor = $83,000

Thus, the direct labor is $83,000

The predetermined overhead rate of 50% of direct labor cost.

So,  

Predetermined overhead rate = $83,000 × 50%

                                                  = $41,500

Thus, the amount of applied overhead is $41,500.

Note : Since ,the predetermined overhead rate of 50% of direct labor cost so we assume ( 1+0.50) 1.50 of direct labor because it is easy to calculate the predetermined overhead rate.

                   

4 0
3 years ago
Explain the law of one price and the theory of purchasing power parity. Why doesn't purchasing power parity explain all exchange
Masteriza [31]

Answer:

The law of one price establishes that the product or service price will remain the same for all the entire world.

Explanation:

The law of one price establishes that the product or service price will remain the same for all the entire world. It is necessary to take into account for this law that the price of the currency  needs to be also the same and that the price of the product or service would not be affected by other factors such as additional buyers or sellers in the market.

On the other hand the purchasing power parity refers to the idea of an equilibrium of currencies in exchange rates, it means that the power for purchasing will be represented in the same way in the different countries, and it is important to mention that this theory is base in the law of one price.

The  the long run equilibrium is an idea that in theory represents all the equilibrium of prices, quantities, and markets in general; on the other hand, for the short run equilibrium there are some limitations in which the market cannot be explained as properly and fully balanced.

6 0
3 years ago
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