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erastova [34]
3 years ago
12

Bond A and Bond B both have 16 years to maturity and a face value of $1,000. Bond A has a 2.50% coupon while Bond B has a 5.5% c

oupon. Assume the current market rate is 2.50%. What is the percentage price change for both bonds if the current market interest rate suddenly rises from 2.50% to 5.00%?
Business
1 answer:
r-ruslan [8.4K]3 years ago
3 0

Answer:

Bond's A price will decrease by 27.09%

Bond's B price will decrease by 24.25%

Explanation:

Bond's A current price: should be 1,000, since he market price = coupon rate

Bond's B current price: using an excel spreadsheet we can calculate the net resent value: =NPV(2.5%,55... fifteen times,1055) = $1,391.65

If the market rate increases to 5%

Bond's A current price: using an excel spreadsheet we can calculate the net resent value: =NPV(5%,25... fifteen times,1025) = $729.06

Bond's B current price: using an excel spreadsheet we can calculate the net resent value: =NPV(5%,55... fifteen times,1055) = $1,054.19

Bond's A price will decrease by: [($729.06 - $1,000) / $1,000] x 100 = -27.09%

Bond's B price will decrease by: [($1,054.19 - $1,391.65) / $1,391.65] x 100 = -24.25%

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The manager of the marketing team has thoughtfully selected team members with their strengths in mind to play roles based on the
hodyreva [135]

Answer:

The correct option is advisor.

Explanation:

In business, advisors can be described as persons who evaluate circumstances and suggest options as what could be done during different circumstances. These options are suggested for the benefit of the company and to lead it towards success. An advisor usually evaluates the business plan for a company.

In the above-mentioned scenario, Andy is entitled to evaluate particular situations and provide better options, hence she is playing the role of an advisor.

3 0
3 years ago
Read 2 more answers
The balance sheet of Cattleman's Steakhouse shows assets of $86,800 and liabilities of $14,800. The fair value of the assets is
xxMikexx [17]

Answer:

The goodwill is $9,220

Explanation:

Goodwill is the excess of purchase consideration paid to acquire a business over the fair value of net assets acquired.

Fair value of net assets acquired is the difference between the fair of assets acquired over the fair value of liabilities taken up which is shown below.

Net assets=$89,600-$14,800

Net assets =$74,800

Since purchase consideration paid is $84020

Goodwill=$84,020-$74800

Goodwill=$9,220

The goodwill of $9220  represents the premium paid over the net assets of Catteman's Steakhouse as a compensation to the owners of the business in return for their efforts of running the business and see go through different phases of development since the establishment of the business.

6 0
3 years ago
When Padgett Properties LLC was formed, Nova contributed land (value of $358,500 and basis of $89,625) and $179,250 cash, and Os
lawyer [7]

Answer:Amount of Nova and Oscar's gain=$492,937.50

Explanation:

a)According to  Land recorded for   § 704(b) book capital account purposes, Land is  recorded at fair market value. With this, the Padgett properties should record the land at $358,500

b)From the question, it is given that the  basis of land is  $89,625. Therefore, the Padgett Properties LLC's tax basis in the land is $89,625.

c)Amount of Nova and Oscar's gain.

Fair market value of Land         $358,500

Basis of land                                  $89,625  

total                                              $ 448,125

but Gain =  Selling price of land - Fair value of Land  x interest in partnership profits and capital  

= $537,750 - ($358,500+$89,625 )

=($537,750 - $448,125 )  x 50% =$44,812.50

Total gain                   $448,125 + $44,812.50 =$492,937.50

4 0
3 years ago
A company purchased inventory for $ 2 comma 000 from a vendor on​ account, FOB shipping​ point, with terms of 2​/10, ​n/30. The
Flauer [41]

Answer:

Inventory would be 1, 768

Explanation:

2,000  goods

 +200  freight-in (A)

  -400  returned goods

 <u>   -32 </u> discount (B)

1, 768 net amount for inventory

<u>Notes:</u>

(A) The freight-in will be included in the inventory, as is a cost needed to have the inventory in the company's possession and be ready to use or sell.

(B) goods x discount rate

net goods 2,000 - 4,00 return = 1,600

discount for payment within 10 days 2%

Discount on purchase: 1,600 x 2% = 32

8 0
3 years ago
Assuming the correlation between the annual returns on the two portfolios is indeed zero, what would be the optimal asset alloca
den301095 [7]
Since you provide no relevant number, 

In order to find out the optimal Asset allocation, you should find out which investment opportunities that Provide the highest return with the lowest standard deviation in the risk department

hope this helps
4 0
3 years ago
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