Answer:
$7,500,000 in 8% bonds, 5 years to maturity, semiannual coupon ($300,000)
sold at premium for $7,740,000
the journal entry to record the issuance should be:
Dr Cash 7,740,000
Cr Bonds payable 7,500,000
Cr Bond premium 240,000
<u>Using the straight line amortization:</u>
amortization per coupon payment = $240,000 / 10 coupons = $24,000
Dr Interest expense 276,000
Dr Bond premium 24,000
Cr Cash 300,000
Answer: $12,113.14
Explanation:
Find out the future value of each payment 20 years from now then sum up the values.
Year 1:
= 250 * ( 1 + 15%)¹⁹
= $3,557.94
Year 2:
= 300 * ( 1 + 15%)¹⁸
= $3,712.636
Year 3:
= 450 * ( 1 + 15%)¹⁷
= $4,842.5688
Future value of all:
= 3,557.94 + 3,712.636 + 4,842.5688
= $12,113.14
Answer:
The portfolio's expected return is 15%
Explanation:
The expected return of a portfolio is the sum of the weight of each asset times the expected return of each asset.
So, the expected return of the portfolio is:
E(RP) = 0.20(.09) + 0.60(.15) + 0.20(.21)
= 0.018 + 0.09 + 0.042
E(RP) = 0.15 or 15%
If we own this portfolio, we would expect to earn a return of 15 percent.
Answer:
The portfolio's beta is <u>0.98</u>
Explanation:
Stock beta id the weghted average beta of a portfolio, Use following formula to calculate the portfolio beta
Portfolio beta = ( Beta of stock X x Weight of Stock X ) + ( Beta of stock Y x Weight of Stock Y )
As per given data
Stock ______ Amount Invested ______ Beta
X _________ $35,000 _____________ 1.50
Y _________ $65,000 _____________ 0.70 ( $100,000 - $35,000 )
Placing values in the fromula
Portfolio beta = ( 1.50 x $35,000/$100,000 ) + ( 0.70 x $65,000/$100,000 )
Portfolio beta = 0.525 + 0.455
Portfolio beta = 0.98
