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NNADVOKAT [17]
3 years ago
15

A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a yield to maturity of 8.3%. If intere

st rates rise and the yield to maturity increases to 8.6%, what will happen to the price of the bond
Business
1 answer:
ohaa [14]3 years ago
7 0

Answer:

The price of the bond will be $879

Explanation:

Price of the bond is the present value of all cash flows of the bond. Price of the bond is calculated by following formula:

According to given data

Coupon payment = C = $1,000 x 6.2 = $62 annually = $31 semiannually

Number of periods = n = 2 x 8 years = 16 periods

Current Yield = r = 8.3% / 2  = 4.15% semiannually

Price of the Bond = $31 x [ ( 1 - ( 1 + 4.15% )^-16 ) / 4.15% ] + [ $1,000 / ( 1 + 4.15% )^16 ]

Price of the Bond = $31 x [ ( 1 - ( 1 + 0.0415)^-16 ) / 0.0415 ] + [ $1,000 / ( 1 + 0.0415 )^16 ]  

Price of the Bond = $31 x [ ( 1 - ( 1.0415)^-16 ) / 0.0415 ] + [ $1,000 / ( 1.0415 )^16 ]  

Price of the Bond = $521.74 + $357.26   = $879

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In a process costing system, which of the following would be TRUE?a.There is no need to track materials to processes.b.There is
Allushta [10]

Answer:

d.All of these choices are true.

Explanation:

In a process costing system, a.There is no need to track materials to processes.b.There is no need to use time tickets to assign costs to processes.c.A process costing system is more expensive to maintain because it has more work-in-process accounts.d.All of these choices are true . All of the choices given are true .

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2 years ago
Fiona signed an agreement to either buy or not buy nick’s vacant lot for $310,000 by a specific date. What's this agreement call
kolezko [41]

Fiona signed an agreement to either buy or not buy nick’s vacant lot for $310,000 by a specific date. This agreement is called a bilateral contract.

<h3>What is bilateral contact?</h3>

A bilateral contract is a contract which is made between two parties. Under this contract, both parties make promises to each other on the terms and conditions. In this contract, the promise of one party turns into a consideration of the other party. It is the most common kind of contract which is binding in nature.

Fiona signed a contract promising to either purchase Nick's vacant lot for $310,000 by a certain date or not. It's referred to as a bilateral contract.

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4 0
2 years ago
How does the budget process make fiscal policy difficult to implement? (lo32-3)?
Keith_Richards [23]
The budget process makes fiscal policy difficult to implement because 
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7 0
3 years ago
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common
notka56 [123]

Answer:

Power Drive Corporation

Journal Entries:

March 1:

Debit Cash Account with $2,548,000

Credit Common Stock with $52,000

Credit APIC - Common Stock with $2,496,000

To record issue of 52,000 additional shares of $1 par value common stock for $49 per share.

May 10:

Debit Treasury Stock with $4,700

Debit APIC - Common Stock with $239,700

Credit Cash Account with 244,400

To record repurchase of 4,700 shares of treasury stock for $52 per share.

June 1:

Debit Dividends- Common Stock with $198,855

Credit Dividends Payable with $198,855

To record cash dividend of $1.35 per share declared (147,300 shares).

June 15:

No records required

July 1:

Debit Dividends Payable with $198,855

Credit Cash Account with $198,855

To record payment of cash dividend.

October 21:

Debit Cash Account with $133,950

Credit Treasury Stock with $2,350

Credit APIC - Common Stock with $131,600

To record reissue of treasury stock for $57 per share.

Explanation:

1. Issue of 52,000 additional shares results to a credit to the Common Stock account with 52,000 x $1 par value.  This is equal to $52,000.  The additional $48 x 52,000 goes to the Additional Paid-in Capital.

2. Treasury stock is the repurchase of outstanding stock by the company.  When repurchase at more than the par value, the difference is a debit to the Additional Paid-in Capital account, when the par value method is adopted.  The other method, which records the whole costs in the Treasury Stock account is the cost method.  Remember that the Treasury Stock account is a contra account to the Common Stock account.

3. Dividends are payable on outstanding stock.  The outstanding stock on June 1 to June 15 is calculated as follows:

Opening balance = 100,000 shares

New issue = 52,000 shares

less Treasury = (4,700)

Total = 147,300 shares

Dividends are then payable on 147,300 shares at $1.35 per share.  This gives a total of $198,855.

4. The resale of Treasury stock reduces the balance of the treasury stock account at par value and increases the Additional Paid-in Capital account with the premium.

3 0
3 years ago
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Doss [256]

Answer:

E. All the statements are correct

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This statement is correct. Some companies do not even pay any income taxes.

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Correct, people who have high incomes, and are subject to a high federal income tax rate often buy municipal bonds because these bonds are exempt from federal income tax.

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Long-term capital gains are those obtained from the sale of property that was owned for more than one year, and are treated with more favorable tax rates.

iv. The corporate tax rates in the U.S. is one of the lowest among the developed nations.

This statement is correct. The corporate tax rate in the U.S. is a nominal 21% (the effective rate can be as low as 0% for some companies). This is one of the lowest rates among developed nations, whose rates hover around 25 to 30% on average.

5 0
2 years ago
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