Answer:
b. 5.27%
Explanation:
First, find the PV of the bond today. With a financial calculator, input the following and adjust the variables to semi-annual basis;
Face value; FV = 1000
Maturity of bond; N = 15*2 = 30
Semiannual coupon payment = (8.75%/2)*1000 = 43.75
Semi annual interest rate; I/Y = 3.25%
then compute Price; CPT PV= 1,213.547
Next, with the PV , compute the yield to call (I/Y) given 6 years;
Maturity of bond; N = 6*2 = 12
Semiannual coupon payment = (8.75%/2)*1000 = 43.75
Price; PV= -1,213.547
Face value; FV = 1,050
then compute Semiannual interest rate; CPT I/Y = 2.636%
Convert the semiannual rate to annual yield to call = 2.636*2 = 5.27%
Answer:
B. Spending by firms on capital goods is declining.
Answer:
I used an excel spreadsheet because there is not enough room here.
Explanation:
Answer:
A. becomes a variable cost
Explanation:
Fixed costs are the expenses that remain constant in a period. During the period under review, fixed costs do not change regardless of the level of output. Fixed costs are mostly made up of overheads such as rent , depreciation, and administrative salaries.
Fixed cost remains constant in a particular financial year. In the long run, business budgets and projections tend to change, resulting in changes to the fixed cost. In other words, in the long run, fixed costs will change. Therefore, in the long run, all costs are variable expenses.
