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Sonja [21]
2 years ago
6

A pension fund has an average duration of its liabilities equal to 17 years. The fund is looking at 4-year maturity zero-coupon

bonds and 4% yield perpetuities to immunize its interest rate risk. How much of its portfolio should it allocate to the zero-coupon bonds to immunize if there are no other assets funding the plan
Business
1 answer:
Dmitry [639]2 years ago
8 0

Answer:

40.91%

Explanation:

Duration perpetuity = 1.04/4%

Duration perpetuity = 1.04/0.04

Duration perpetuity = 26 years

Now, 17 = (Wz)*4 + (1 - Wz)*26

17 = 4Wz + 26 - 26Wz

26Wz - 4Wz = 26 - 17

22Wz = 9

Wz = 9/22

Wz = 0.409091

Wz = 40.91%

So, 40.91% of its portfolio should be allocated to the zero-coupon bonds to immunize, if there are no other assets funding the plan.

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Accounts Debits Credits
ikadub [295]

Answer:

a. Unadjusted Trial Balance

Accounts                   Debits   Credits

Cash                       $ 47,300

Accounts Receivable 10,400

Supplies                     3,400

Equipment               19,400

Accumulated Depreciation    $ 3,800

Salaries Payable                        

Common Stock                       28,000

Retained Earnings                    8,200

Dividend                     1,100

Service revenue                    54,000

Repairs and

maintenance exp $12,400

Totals                 $ 94,000 $ 94,000

b. Adjusted Trial Balance

Accounts                   Debits   Credits

Cash                        $ 47,300

Accounts Receivable 10,400

Supplies                        1,200

Equipment                  19,400

Accumulated Depreciation    $ 8,200

Salaries Payable                      20,700

Common Stock                       28,000

Retained Earnings                    8,200

Dividend                     1,100

Service revenue                    54,000

Repairs and

maintenance exp    12,400

Salaries expense    20,700

Depreciation Exp      4,400

Office supplies exp  2,200  

Totals                    $119,100 $ 119,100

3. Income Statement for the year ended December 31, 2021

Service revenue                    54,000

Repairs and

maintenance exp    12,400

Salaries expense    20,700

Depreciation Exp      4,400

Office supplies exp  2,200  39,700

Net income                         $14,300

4. Post-closing Trial Balance

Accounts                   Debits   Credits

Cash                        $ 47,300

Accounts Receivable 10,400

Supplies                        1,200

Equipment                  19,400

Accumulated Depreciation     $ 8,200

Salaries Payable                       20,700

Common Stock                        28,000

Retained Earnings                    21,400

Totals                      $78,300 $78,300

Explanation:

a) Data and Calculations:

Accounts                   Debits   Credits

Cash                       $ 17,000

Accounts Receivable 7,400

Supplies                     3,400

Equipment               12,000

Accumulated Depreciation    $ 3,800

Salaries Payable                        5,800

Common Stock                       22,000

Retained Earnings                    8,200

Totals                  $ 39,800 $ 39,800

1. March 12 Accounts receivable $20,400  Cash $33,600 Service revenue $54,000

2. May 2 Cash $17,400 Accounts receivable $17,400

3. June 30 Cash $6,000 Common stock $6,000

4. August 1 Salaries Payable $5,800 Cash $5,800

5. September 25 Repairs and maintenance expenses, $12,400 Cash $12,400

6. October 19 Equipment $7,400 Cash $7,400

7. December 30 Cash dividends $1,100 Cash $1,100

Adjusting entries:

Salaries expense $20,700 Salaries payable $20,700

Depreciation Expense $4,400 Accumulated Depreciation $4,400

Office supplies expenses $2,200 Supplies $2,200

4 0
2 years ago
$159 per unit $205 per unit $166 per unit $292 per unit Olds Inc., which produces a single product, has provided the following d
ruslelena [56]

Answer:

Unit product cost= $204

Explanation:

Giving the following information:

Number of units produced 10,700

Variable costs per unit:

Direct materials $108

Direct labor $51

Variable manufacturing overhead $7

Fixed manufacturing overhead $417,300

Under the absorption costing method, the unit product cost is calculated using the direct material, direct labor, and total unitary overhead.

First, we need to calculate the unitary fixed manufacturing overhead

unitary fixed manufacturing overhead = 417,300/10,700= $39 per unit

Unit product cost= 108 + 51 + 7 + 39= $204

4 0
2 years ago
Productivity at the Wisconsin branch of Big Box Manufacturing has decreased significantly over the last twelve months. Aaron, th
34kurt

Answer:

<u>State the primary message, lay out supporting reasons, and conclude with a call to action. </u>

<u>Explanation:</u>

Indeed, as a branch manager, Aaron needs to <em>state the primary message</em> he has for the company's leadership team, which is to improve manufacturing.

Next, he should <em>lay out supporting reasons</em> such as the discoveries from his research which shows that many employees are spending significant time on social media while at work.

Finally, <u>conclude with a call to action. </u>

6 0
3 years ago
Marginal Utility is the satisfaction or usefulness obtained from acquiring one more unit of a product.
skad [1K]

<u>Answer:</u>

<em>True </em>

<em></em>

<u>Explanation:</u>

Marginal utility evaluates the additional fulfillment that a customer earns from consuming extra units of merchandise or administrations. The idea of marginal utility is utilized by market analysts to decide the number of items customers are eager to buy. Positive peripheral service happens when the utilization of an extra thing expands the free utility while minimizing negative utility happens when the use of an extra something diminishes the complete efficiency.

5 0
3 years ago
Read 2 more answers
Central Perk orders their organic coffee filters from a South American supplier that mails them as inexpensively (hence, as slow
katovenus [111]

Answer:

1,360 filters

Explanation:

To avoid the material / inventory shortage a company calculates the a level of inventory at which a new order will be placed. It consider the lead time to deliver an order.

Daily usage = 80 filters

Delivery lead time = 14 days

Reorder Point formula = ( Daily usage x Lead time ) + Safety Stock

We need safety stock to calculate the reorder level. Safety stock is the level of inventory which is maintained to eliminate the risk of stock out of inventory.

Safety stock = (Maximum daily usage x Maximum lead time in days) – (Average daily usage x Average lead time in days).

Safety stock = ( (80+5) filters x (14+2) days ) – ( 80 filters x 14 days )

Safety stock = 1,360 filters - 1,120 filters = 240 filters

Placing values in Reorder point formula

Reorder Point formula = ( 80 x 14 ) + 240 = 1360 filters

4 0
2 years ago
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