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Licemer1 [7]
3 years ago
10

You just learned that a blue chip company will issue a bond with a maturity of 100 years. The bond appears to be a good deal bec

ause it yields 5.78 percent. Assuming that the inflation rate stays at 4.39 ​percent, what is the​ bond's real rate of return​ today? If you are looking for a bond to purchase and hold for several​ years, will you buy this​ bond? Explain your answer in terms of future inflation projections and the length of the​ bond's maturity.
Business
1 answer:
PIT_PIT [208]3 years ago
4 0

Answer:

The bon's real rate of return is 1.39%.

As we know the inflation rate behave same as the bond yield because the bond yield includes the inflation impact.

In case of if there is a increase in the inflation in future. I will not buy this bond, because the price of the bond will fall and as percentage increases the present value of the cash flows also decreases which is the basis used for pricing the bons.

In case of if there is a decrease in the inflation in future, I will buy this bond, because the price of the bond will rise and as percentage decreases the present value of the cash flows also increases which is the basis used for pricing the bons.

Explanation:

Real Rate of return = Nominal rate - Inflation rate

As Bond yield is nominal rate

Real rate of return = 5.78% - 4.39% = 1.39%

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Answer:

1. Inventory account will be affected and assertions of accuracy and valuation will be violated.

2. Assets are overstated and assertion classification is violated.

3. Liability is understated and assertions of accuracy is violated.

4. No impact.

Explanation:

Assertions are certain claims of a business which a business must fulfill in order to make its financial statements reliable. A company has to record the expense when it is incurred in order to provide accuracy in valuation. In the given cases the assertions are violated which impact business accounts.

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3 years ago
The City of Ruth has been awarded a $1,000,000 federal expenditure-driven grant to improve bike trails. The federal government a
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Answer:

correct option is a) $182,000

Explanation:

given data

federal expenditure = $1,000,000

advanced the city =  $600,000

city incurred qualifying expenditures = $418,000

solution

we get here Ruth recognize as unearned revenue for its fiscal year ending that is express as

Amount to be recognized unearned revenue = advanced the city  - city incurred qualifying expenditures   .......................1

put here value

Amount to be recognized unearned revenue = $600,000-$418,000

Amount to be recognized unearned revenue = $182,000

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5 0
3 years ago
All of the following questions are open-ended problems. You must compute an answer for every problem. For percentage answers, ca
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Solution :

13. Net income = total assets x ROA

                   = $ 1,000,000 x 12%

                  = $ 120,000

Net Income for company is $120,000.

Net Profit margin = 4.25%

Total sales = net income / net profit margin

                  = $ 120,000 / 4.25%

                  = $ 2,823,529

Total sales for company is $ 2,823,529

14. Debt ratio = 72%

   So weight of debt = 72%

   Weight of equity = 1 - 72%

                                = 28%

   Debt equity ratio  $=\frac{72 \%}{28 \%}$  

                                 =  2.57

   Debt equity ratio is 2.57

15. Debt ratio = 42.50%

So, weight of debt = 42.50%

Weight of equity = 1 - 42.50%

                             = 57.50%

Weight of equity is 57.50%.

Return on equity = 15%.

Return on assets = 57.50% × 15%

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Return on assets is 8.625%.

16.

Debt Equity ratio = 1.45

Weight of debt = 59.18%

Weight of equity = 40.82%

Return on assets = 16%

Return on equity = 16% / 40.82%

                              = 39.20%

Return on equity is 39.20%.

17.

Total Assets turnover = Sales / Total Assets

                                     = (Net Income / Total Assets) / (Net Income / Sales)

                                    = ROA / Net Profit margin

                                      = 7.50% / 15%

                                      = 0.50

Total Assets turnover is 0.50.

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Answer:

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Explanation:

  • From an economic or business perspective, outsourcing of operational activities or conducts refer to assigning the business functions, activities, projects, assignments etc. to any third party or external agency with a view to enhance work productivity and minimize overall average operational costs or expenses.
  • The third party or the external entities involved in the outsourcing activities are typically not part of the parent or main company or are not commercially affiliated with the parent or main company.
  • One of the advantages of outsourcing to the company executives is to be able to assign some of the major and time consuming business activities to outsourced companies or entities and focus more on other mediums or sources of revenue generation for business. It might include introduction of new product or service lines, restructuring of the internal organizational settings or venturing new markets to capture higher consumer or client base. Hence, higher work or labor division through outsourcing activities can provide more time and opportunity for executives to focus more on other revenue generating endeavors.
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