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umka21 [38]
3 years ago
13

Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 7% paid annually. Assume you buy the

bond at its face value of $1,000, and the inflation rate is 8%.
(a) What will be your cash flow at the end of the year?
(b) What will be your real return?
(c) What will be your nominal return?
Business
1 answer:
Kryger [21]3 years ago
7 0

Answer:

at maturity I will receive 1,155.6

the real return is 7%

the nominal will be 15.56%

Explanation:

As it is indexed it will paid a real rate of 7% adjusted for 8% inflation

1,000(1+r)(1+\delta)=Amount

1,000 x 1.07 x 1.08 = 1,155.6 received at maturity

no know the nominal rate we do:

\frac{Amount}{Principal}-1

\frac{1,155.6}{1,000}-1

nominal = 0.1556 = 15.56%

You might be interested in
The stockholders’ equity section of Pretzer Corporation consists of common stock ($10 par) $2,650,000 and retained earnings $532
CaHeK987 [17]

Answer:

A. $2,650,000 $3,312,500

B.$532,000 $291,500

C.$10 $10

Explanation:

Before Dividend After Dividend

(a)Stockholders’ equity

Paid-in capital

Common stock, $10 par

$2,650,000 $2,915,000

In excess of par value $106,000

Total paid-in capital

$2,650,000 $3,021,000

Retained earnings

$532,000 $291,500

Total stockholders’ equity

$3,182,000 $3,312,500

(b)Outstanding shares

$265,000 $291,500

(c)Par value per share

$10 $10

10×$26,500=$265,000

$2,650,000+$265,000=$2,915,000

$14×$26,500=$371,000-265,000

=$106,000

$265,000+$26,500=$291,500

8 0
3 years ago
BlendedBlended Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the​ year, Al
ehidna [41]

Answer:

The answer is: $2,300

Explanation:

To determine the ending balance of the account Allowance for Bad Debts of Blended Corporation, we can use the following formula:

ending balance = beginning balance - amount wrote off + recorded bad debts

ending balance = $1,300 - $1,800 + $2,800 =$2,300

4 0
3 years ago
Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per annum on a
shtirl [24]

Answer: 92812.50

Explanation:

The following information can be derived from the question:

Loan principal = $1,500,000

LIBOR for 1st 6 months = 4.50%

LIBOR for last 6 months = 5.375%

Lending margin per annum = 1.25%

The interest will then be:

= 1,500,000 × [(4.50% + 1.25%)/2] + 1,500,000 × [(5.375% + 1.25%)/2]

= 1,500,000 × [(0.045 + 0.0125)/2] + 1,500,000 × [(0.05375 + 0.0125)/2]

= 92,812.50

Therefore, the interest is 92812.50.

8 0
2 years ago
Conor broke his wrist while playing basketball in the backyard. He ended up in the hospital. After an X-ray, MRI, doctor visit a
Anna11 [10]

Answer:

$6,000

Explanation:

A deductible is the amount Conor has to pay before his medical bills and prescriptions start getting coverage from his insurance.

Step 1: 10,000 - 2,000 = 8,000

A co-pay is a fixed amount the insured has to pay for certain medical services.

Step 2: 20% of 8,000 or 0.20 times 8,000 = 1,600

Step 3: add $2,000 (the deductible you have to pay) and $1,600 (the co-pay)

Total amount that Conor will have to pay for the hospital: $3,600

3 0
3 years ago
how should trash and recyclables be stored food in an area only accessible to employees in a well ventilated space in a manner t
strojnjashka [21]

Trash and recyclables should be stored in the following ways:

  • double bagged and stacked.
  • in a well ventilated space.

<h3>What is pollution?</h3>

Pollution can be defined as the physical degradation, destruction or contamination of the environment, especially through littering of waste products (garbage) or an emission of hazardous, poisonous, and toxic chemical compounds by various factories and industries.

<h3>What is recycling?</h3>

Recycling can be defined as a waste (trash) management technique that involves the process of converting a raw material that has reached the end of its life cycle into new and reusable items.

According to the Environmental Protection Agency (EPA), trash and recyclables should be properly stored through methods that are friendly and unharmful to the ecosystem.

In this context, we can reasonably infer and logically deduce that trash and recyclables should be stored in the following ways:

  • double bagged and stacked.
  • in a well ventilated space.

Read more on trash and recyclables here: brainly.com/question/24588352

#SPJ1

Complete Question:

How should trash and recyclables be stored?

inaccessible to pests

double bagged and stacked

in a well ventilated space

in an area only accessible to employees

8 0
2 years ago
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