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castortr0y [4]
3 years ago
6

Lee is considering buying one of two newly-issued bonds. Bond A is a twenty-year, 7.5% coupon bond that is non-callable. Bond B

is a twenty-year, 8.25% bond that is callable after two years. Both bonds are comparable in all other aspects. Lee plans on holding his bond to maturity. What should Lee do if he feels that interest rates are going to decline by 2% in the near future and then remain relatively stable thereafter
Business
1 answer:
vova2212 [387]3 years ago
6 0

Answer:

Multiple choices below are missing:

A) purchase Bond A

B) purchase Bond B

C) purchase neither A nor B at this time

D) negotiate a higher rate on Bond A

The correct option is A,purchase bond A.

Explanation:

By purchasing Bond A,Lee is assured interest payment of 7.5% for a period of twenty years,hence the issuer cannot call the bond if interest rate drops by 2% in order to issue a lower interest-bearing bond which would be cheaper cost-wise.

However, if Lee purchases Bond B with current coupon of 8.25%,the interest is only guaranteed for a period of two years,since the issuer has the prerogative of calling back the bond after two years should interest fall in order to issue another bond that commands lower interest rate.

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Answer:

The top career choices for making the most money are being an investment banker or physician. Engineer and pharmacist are good options as well.

3 0
3 years ago
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Use straight line (SL) depreciation to determine a. annual depreciation charge (5 points) and b. annual book values for the life
Andrew [12]

Explanation:

The computation is shown below:

Year            Depreciation                Book value

0                                                      $1,200,000

1                   $125,000                    $1,075,000

2                  $125,000                    $950,000

3                  $125,000                    $825,000

4                  $125,000                    $700,000

5                  $125,000                    $575,000

6                  $125,000                    $450,000

7                  $125,000                     $325,000

8                  $125,000                     $200,000

The depreciation expense is

= ($1,200,000 - $200,000) ÷ (8 years)

= $125,000

4 0
3 years ago
Which occupation would be least affected by inflation?
nexus9112 [7]
It seems that you have missed the given options for this question, but anyway here is the correct answer. The occupation that would be least affected by inflation would be a doctor in private practice. Inflation is defined as a rise in the general level of prices. Hope this is the answer that you are looking for. 
6 0
3 years ago
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Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $
Viefleur [7K]

Answer:

A. $2.40 per Machine hour

B. Underapplied = $10,000

C. cost of goods sold (debit) $10,000 , overheads (credit) $10,000

Explanation:

A) Compute the manufacturing overhead rate for the year

Overhead Rate = Total  Fixed Overheads / Budgeted Activity

                         =   $300,000 / 125,000 Machine hours

                         =   $2.40 per Machine hour.

B) What is the amount of under- or over applied overhead at December 31st?

Under Applied Overheads = Actual Overheads > Applied Overheads

Over Applied Overheads = Actual Overheads < Applied Overheads

Actual Overheads = $322,000

Applied Overheads = $2.40 × 130,000 hours = $ 312,000

Underapplied = $10,000

C) Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.

cost of goods sold (debit) $10,000

overheads (credit) $10,000

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Suppose labor's share of output is 60% and capital's share of output is 40%. If labor grows at a rate of 5%, then this will caus
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If capital grows at a rate of 5%, then this will cause output to grow at a rate of 1%.

Given,

Labor's share of output = 60%

Capital's share of output = 40%

Labor grows on a rate of = 5%

Capital grows on a rate of = 5%

Thus, output will grow at a rate of = ?

SR(t) = Δy/Δt/Y - (αΔk/Δt/k(t) + (1-α)(ΔL/Δt/L(t))

Here, α = 60%

So, labor's share = (1 - 0.6) × 5  = 2%

Capitals contribution = 0.4 × 5  = 2%

Implied rate of growth in technology is also given,

SR = (5) - (2+2)

= 1%

Hence, if capital grows at a rate of 5%, then this will cause output to grow at a rate of 1%.

To learn more about capital here:

brainly.com/question/24212838

#SPJ1

8 0
1 year ago
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