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qaws [65]
3 years ago
12

Suppose that 2 years after the issue date (as in Part a) interest rates fell to 8%. Suppose further that the interest rate remai

ned at 8% for the next 8 years. What would happen to the price of the bonds over time
Business
1 answer:
Elenna [48]3 years ago
5 0

Answer:

the first part of the question is missing, so I looked fro a similar one:

<em>Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments.</em>

the market price of the bond after 2 years:

PV of face value = $1,000 / (1 + 4%)¹⁶ = $533.91

PV of coupon payment = $50 x 11.652 (PV annuity factor, 4%, 16 periods) = $582.60

market price = $1,116.51

the market price of the bond after 5 years:

PV of face value = $1,000 / (1 + 4%)⁶ = $790.31

PV of coupon payment = $50 x 5.2421 (PV annuity factor, 4%, 6 periods) = $262.11

market price = $1,052.42

the market price of the bond after 7 years:

PV of face value = $1,000 / (1 + 4%)² = $924.56

PV of coupon payment = $50 x 1.8861 (PV annuity factor, 4%, 2 periods) = $94.31

market price = $1,018.87

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Levart [38]

Answer:

Explanation:

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5 0
3 years ago
Consider the following Specific Factors model. Suppose two countries, Home and Foreign, produce two goods, timber and television
jok3333 [9.3K]

Answer:

a. True

b. True

c. True

d. False

e. True

f. False

g. False

Explanation:

There are two countries which are about to enter into the free trade. Under the free trade circumstances the Home country will produce timber but it does not completely specializes in producing the timber. The labor is mobile factor which can move in the free trade therefore they will move towards their employability in the TV industry.

7 0
3 years ago
Elevator speech is another term for
Fynjy0 [20]

Answer:

An elevator pitch, elevator speech, or elevator statement is a short description of an idea, product, or company that explains the concept in a way such that any listener can understand it in a short period of time.

4 0
3 years ago
Read 2 more answers
Adam and barb go to the store to purchase some lottery tickets. without looking at the price, adam says "i’ll take 10 lottery ti
Shtirlitz [24]

Answer:

Price elasticity of demand for Adam=0

Price elasticity of demand for Barb=1

Explanation:

Price elasticity of demand = %age change in demanded QTY / %age change in demanded price

The price is not important for Adam, and he demands a fixed quantity, hence his demand curve is vertical. A perfectly vertical demand curve is can inelastic demand curve and has price elasticity =0

The quantity is not important for Barb, and he demands a fixed price, hence his demand curve is horizontal. A perfectly horizontal demand curve is has price elasticity =1

6 0
4 years ago
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credi
seropon [69]

Answer:

Explanation:

The journal entry is shown below:

(A) Sales return and allowance A/c Dr $450,000

    To Accounts receivable                        $450,000

(being returned goods recorded)

Merchandise inventory A/c Dr $292,500   ($450,000  × 65%)

       To Cost of goods sold                      $292,500

(Being cost of goods sold recorded)

The computation of the estimated return is shown below:

= Sale value of merchandise × return percentage - actual return

= $11,500,000 × 4% - $450,000

= $460,000 - $450,000

= $10,000

(B) Sales return and allowance A/c Dr $10,000

    To Accounts receivable                        $10,000

(being returned goods recorded)

Merchandise inventory A/c Dr $6,500   ($10,000  × 65%)

       To Cost of goods sold                      $6,500

(Being cost of goods sold recorded)

The computation of the year-end allowance for sales returns is shown below:

The amount is same $6,500

4 0
3 years ago
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