Jared purchased a 10-year $100 par value bond with semiannual coupons at a nominal annual rate of 5% convertible semiannually an
d nominal annual yield rate of 6% convertible semiannually.a. Calculate the book value of the bond immediately after the 4th coupon.b. Calculate the accumulation of discount in the 6th coupon.c. Calculate the interest portion of the 8th coupon.
1 answer:
Answer:
a) The book value of the bond immediately after the 4th coupon:
It is the ending of the period book value from the for the fourth period above schedule = $93.72.
b) Accumulation of the discount in the 6th coupon:
It is the sum of principal portion for period 1 to 6 = 0.28 + 0.29 + 0.29 +0.30 + 0.31 + 0.32 = $1.79
c) Interest portion of the 8th coupon:
It is the interest portion for the 8th period = $2.84.
Explanation:
DEtailed solution is attached below:
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Answer:
Wage rate = $960
Explanation:
Supply of labor is the number of hours workers are willing to work at a given real wage rate. When wage rate increases, supply of labor also increases because more people are encouraged as now they can obtain a higher income. When wage rate decreases, labor supply also decreases.
<em><u>View diagram</u></em>
In this case, however, there has been a decrease in supply, causing the supply curve to shift from S to S1. This can be due to many reasons such as migration, increase in minimum working age or increase in interest in education causing more people to study. When the supply of labor falls, there are less people available for work. Thus, demand exceeds supply, causing a shortage. Hence, the pressure causes price, i.e. wage rate to increase. To determine by how much the increase is, cross-multiplication can be used:
At 25 laborers, wage rate is $600 (25 = 600)
At 15 workers, wage rate is X (15 = X)
We now substitute for X, which is the amount by which wage rate will increase.
25 / 600 = 15 / X
Thus, 25X = 9000 (600 x 15)
9000 / 25 = X
X = 360.
Hence, wage rate at 15 laborers is 600 + 360 = $960
