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ra1l [238]
3 years ago
13

Josh pays $3,000 for a Treasury Inflation-Protected Security that has an annual interest rate of three percent. By the end of th

e first year that he owns the bond, consumer prices have increased by 10 percent. After this adjustment, how much interest is he paid per year?
Business
1 answer:
Marina CMI [18]3 years ago
4 0

Answer:

$99

Explanation:

Treasury inflated protected security is defined as type of security issued by the government that is indexed for inflation. This reduces the risk to investors as a result of reduced purchasing power from inflation.

In this scenario Josh is paying $3,000 for a treasury inflation-protected security.

If the value of Josh's bond increases by 10% as a result of increase in consumer price, we will calculate the new bind price

New bond value= 1.10 * 3,000= $3,300

The interest paid by Jos is 3%

New interest= 0.03 * 3,300= $99

So Josh will now pay $99 as interest

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VladimirAG [237]
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3 0
2 years ago
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Assume that interest rate parity holds and that 90-day risk-free securities yield 6% in the United States and 6.5% in Germany. I
Marianna [84]

Answer: 1.356345

Explanation:

Based on the scenario and information provided in the question, the 90-day forward rate will be calculated as:

= Spot Rate × (1 + Germany Interest Rate) / (1 + United States Interest Rate)

= 1.35 × (1 + 6.5%) / (1 + 6%)

= 1.35 × (1 + 0.065) / (1 + 0.06)

= 1.35 × 1.065/1.06

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3 0
2 years ago
An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalay
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Answer:

b. Overvalued

Explanation:

Overvalued stocks are securities that trade higher than their fair market value, i.e. the value that the company's fundamentals, such as earnings or revenues justify.

4 0
3 years ago
The information below pertains to Basselier, Inc.:
wel

Answer and Explanation:

The journal entry to record the tax provision is given below:

Income tax expenses $48,840,000

Deferred tax assets ($10,900,000 ×0.40) $4,360,000

        To Deferred tax liability (($15,900,000 + $1,900,000)×0.40) $7,120,000

          To Income tax payable ($129,000,000 ×0.40) $51,600,000

(To record income tax expenses)  

Here the income tax expense and deferred tax asset should be debited as it increased the asset and expenses and credited the liability & tax payable as it increased the liability  

4 0
2 years ago
Jacob has built up a wide network of contacts, clients, and local business neighbors since moving to Central City five years ago
Nata [24]

Answer:

The answer is network.

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Network is a way of interacting with others to exchange some information or establish social contacts. Since Jacob has built up a wide range of contacts, clients, and local business neighbors over the years as mentioned in the statement, he will generally leverage on the network he has developed with these individuals as he intend to move to another phase of his career.

7 0
3 years ago
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