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Sonja [21]
3 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]3 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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Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are: M N OUnit sale
kolbaska11 [484]

Answer:

Selling price per composite unit= $11.3

Explanation:

Giving the following information:

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2.

Unit price and cost data are: M N OUnit sales price$12 $10 $11

<u>First, we need to calculate the sales proportion for each product:</u>

M= 3/6= 0.5

N= 1/6= 0.17

O= 2/6= 0.33

<u>Now, the selling price per composite unit:</u>

Selling price per composite unit= (0.5*12) + (0.17*10) + (0.33*11)

Selling price per composite unit= $11.3

6 0
3 years ago
The second stage of the consumer buying process is?
zubka84 [21]
Well i suppose the second stage involves the information search of the consumer buying process.<span />
3 0
3 years ago
santa klaus toys just paid a dividend of $2.10 per share. the required return is 11.5 percent and the perpetual dividend growth
Neporo4naja [7]

The value of stock after 5 years from today will be $29.48 considering the dividend paid and growth rate.

Given information:

Dividend per share = $2.10

Required rate of return = $11.5

Growth rate = 3% = 0.03

Dividend after 5 years = 2.10 (1+0.03) ^6 =$2.506

Value of stock= Dividend per share / (Required rate of return-growth rate)

Value of stock = 2.506/ (0.115-0.03) = $29.48

A stock is a colloquial phrase for any company's equity certificates. But at the other hand, a share alludes to a specific company's stock certificate. You become such a shareholder if you acquire shares of a particular corporation. There are two sorts of stocks: ordinary and preferred. The distinction is that whereas the owner of the former can exert right to vote in company decisions, the latter doesn't really. However, even before dividends are distributed to other shareholders, preferred shareholders have a lawful authority to a specific amount of dividend payouts.

Learn more about stocks here:

brainly.com/question/27385142

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5 0
1 year ago
________________indicates that fair value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue r
pav-90 [236]

Answer:

C. Measurement (historical cost principle)

Explanation:

Measurement indicates that fair value changes subsequent to purchase are not recorded in the accounts

3 0
3 years ago
If the demand for cell phone service is inelastic, then the quantity demanded does not change in response to changes in price. t
jenyasd209 [6]

Answer:

the percentage change in quantity demanded is less than the percentage change in price (in absolute value).

Explanation:

Inelastic demand is when the demand for a product remains relatively constant, even if its price changes. Goods and services considered essential have inelastic demand. Foods stuff and petrol will have a constant demand regardless of their price levels.

A small percentage change in the price of an inelastic good or service will have minimal changes in its demand. For example, drinking water is an essential commodity. A small change in its price will not have any significant change in demand because people will need to drink water regardless of its price. Therefore, a small percentage change in price causes a lesser percentage change in quantity demanded.

8 0
3 years ago
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