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Rasek [7]
3 years ago
14

Bond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent. Both bonds have 13 years to maturity, make semi

annual payments, and have a YTM of 6 percent. a. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds
Business
1 answer:
noname [10]3 years ago
6 0

Solution :

Given :

Coupon rate for Bond J = 3%

Coupon rate for Bond K = 9%

YTM = 6 %

Therefore,

The current price for Bond J = $ 718.54       =PV(6%/2,13x2,30/2,1000)x -1

The current price for Bond K = $ 1281.46       =PV(6%/2,13x2,90/2,1000)x -1

If the interest rate by 2%,

Bond J =  $ 583.42     =  -18.80% (change in bond price)

Bond K  = $ 1083.32   = -15.46% (change in bond price)

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Kroger, a supermarket chain, has committed to source 100 percent of wild-caught seafood in its seafood departments from fisherie
saul85 [17]

Answer:

Kroger has the buying objective of responsible  sourcing and supply chain sustainability.

Explanation:

Responsible sourcing involves procuring materials for a business where ethics and long-term sustainability are the watchwords.

The only to way to ensure suppliers do the right in business is for their customers to assess them based on ethics and sustainability,hence supplier that does not conform to ideal business ethics is at the risk of losing business. No doubt that  suppliers are forced to the right thing in ensuring the environment and their host communities do not suffer hardship emanating from their operational hazards.

8 0
3 years ago
Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true?a. During an eco
kenny6666 [7]

Answer:

Statements "A" is true.

Explanation:

During a financial recession and a cynical domain, the yield spread between government securities and corporate securities could be higher than during great monetary occasions. This is because the grounds that during a recession, corporate securities would convey more hazard, (for example, higher default chance) than during great monetary occasions. To make up for this extra hazard, financial specialists would request more returns.

5 0
3 years ago
Jackie notices everyone wearing Converse sneakers on the first day of school. Ever the fashionista, this will likely affect: Mul
masha68 [24]

Answer:

Jackie's income, as she now needs to buy Converse and will have less to spend on other goods.

Explanation:

Jackie is a fashionista and so she would respond to trends. Since everyone around her is wearing converse, she would want to wear converses too. so her income would be affected as it would be reduced as she would buy the converse.

8 0
3 years ago
Frank Corporation manufactures a single product that has a selling price of $25.00 per unit. Fixed expenses total $64,000 per ye
gavmur [86]

Answer:

Break-even point in units= 10,375

Explanation:

Giving the following information:

Selling price= $25

Fixed cost= $64,000

Break-even point in units= 8,000

<u>First, we need to determine the unitary contribution margin:</u>

Break-even point in units= fixed costs/ contribution margin per unit

8,000 = 64,000 / contribution margin per unit

contribution margin per unit8,000= 64,000

contribution margin per unit= 64,000 / 8,000

contribution margin per unit= $8

<u>Now, the number of units to be sold to make a profit of $19,000:</u>

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (64,000 + 19,000) / 8

Break-even point in units= 10,375

8 0
2 years ago
Eastern Electric expects to pay a dividend of $1.69 per share next year and sells for $24 a share. a. If investors believe the g
jonny [76]

Answer:

a. 9.04%

b. 4.96% approx.

c. 10%

Explanation:

a. As per dividend growth model,

Required rate of return = \frac{D_{1} }{P_{0} } \ +\ g

wherein, D_{1} = Next year expected dividend

               P_{0} =  Current market price of a share as on today

               g = Annual growth rate in dividend ( in percentage)

               r = Rate of return or cost of equity

Hence, required rate of return (r) = \frac{1.69}{24} \ +\ .02   = 9.04%

b.  R = 12%

    P_{0} = $24

    D_{1} = $1.69

Then, using the above formula, we have,

.12 = \frac{1.69}{24} \ +\ g

⇒ g = 4.96 % approx

c. g = 3%

   Retention ratio (b) = 30%

   Hence dividend payout ratio = 1 - 30 = 70%

   g = b × r

   .03 = .3 × r

⇒ r = 0.1 or 10%

Hence, rate of return earned by the firm on its's new investment is 10%.

   

8 0
3 years ago
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