An investor purchased 10 go bonds at a discount of 2 points per bond. the bonds mature in 10 years. after holding the bonds for 5 years, they were sold at par. for tax purposes, the investor has a $100 gain.
The cost per bond is $980. The accretion amount each year is $20. $20 ÷ 10 years = $2 per year. $2 per year × 5 years = $10 per bond accretion, making the adjusted cost basis $990 per bond.
When the bonds are sold at par ($1,000), there is a profit of $10 per bond × 10 bonds, which equals a $100 gain.
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Answer:
a. Long
b. $375.00
Explanation:
a. If interest rates decrease over the period of investment, Treasury bond prices will increase. Thus, Dudley Savings Bank should take a long position in the futures contracts on the Treasury bonds. As T-bond prices go up, so will T-bond futures prices.
b. Given a long position:
Net profit = Sale price of futures − Purchase price of futures
= $107,687.50 − $107,312.50 = $375.00
Purchase price of futures = 107 − 100 = 107 10/32% × $100,000 = $107,312.50
Sale price of futures = 107 − 220 = 107 22/32% × $100,000 = $107,687.50
Explanation:
Answer:
(1) <em>Services</em> <em>are not separable.</em>
<em>(2) Services</em> <em>are intangible: they can only be felt</em>.
Explanation:
(1) <u>Services are not separable</u>
Services can't be separated from a person once they are felt. In this case Greer felt had a satisfactory experience of manicures several times which enabled her to have a judgment about the latest manicure service.
(2) <em><u>Services </u></em><u>are intangible: they can only be felt</u>
<em>Services</em> are intangible i.e. they can only be felt. The past fruitful experiences of Greer towards the manicure services and the current latest manicure service experience was only felt by her and not measured numerically. The experiences felt from the respective service offerings enabled her to make the decision about her latest services availed of manicure.
Answer and Explanation:
The computation is shown below:
Predetermined overhead rate is
= Variable overhead cost per direct labor hours + Fixed overhead cost ÷ Direct labor-dollars
= $0.17 + $4,956,000 ÷ 8,260,000
= $0.17 + $0.6
= $0.77
Now the total cost is
= Direct material cost + direct labor cost + manufacturing cost
= $1,386,000 + $2,478,000 + ($2,478,000 × $0.77)
= $5,772,060
Answer:
Cheese is a complement for hamburgers. If the price of hamburgers rises, the quantity of hamburgers demanded will <em>fall</em>, which will lead to a <em>fall in the demand</em> for cheese, as cheese and hamburgers are complements to each other. A rise in price of a complementary good will lead to a fall in demand for the complementary good as well. Because of the change in <em>demand</em> for cheese the equilibrium quantity of cheese will <em>fall</em> and the equilibrium price for cheese will also <em>fall</em>, the demand for milk by cheese producers will <em>decline</em>, causing the equilibrium price of milk to <em>fall</em>. This means producers of butter face <em>lower</em> input prices and the supply of butter will <em>rise</em>. The resulting <em>decline</em> in the price of butter causes people to substitute <em>jam for butter</em>, so the demand for jam will <em>decline</em>.