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7nadin3 [17]
3 years ago
14

1-year Treasury bill yield is 3.5%. 10-year Treasury bond yield is 4.5%. Expected rate of inflation embedded in both the Treasur

y bill and bond is 2.0%. Average yield on AAA-rated 10-year corporate bonds is 5.75%. Average yield on BB-rated 10-year corporate bonds is 8%. Liquidity premium on both Treasury bill and bond is zero. Liquidity premium on both AAA-rated and BB-rated bonds are 0.5%. What is the maturity risk premium embedded in the 10-year Treasury bond
Business
1 answer:
garik1379 [7]3 years ago
6 0

Answer: 2.5%

Explanation:

Treasury bonds have no default risk as they are backed by the U.S. government. The premiums that make up the yield are the inflation, liquidity and maturity risk premiums.

Required yield on Treasury bond = Inflation premium + Liquidity premium + Maturity risk premium

4.5% = 2% + 0% + Maturity risk premium

MRP = 4.5% - 2% - 0%

= 2.5%

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Johnny’s Drive-in pays its employees bi-weekly. The first payday of 2014 will be on January 3 and will compensate employees for
Sonbull [250]

Answer:

Accounts

Wages Expense

Wages Payable

$100,000

$100,000

Explanation:

As the expense is accrued but not paid at the end of 2013. The transaction requires an adjusting entry. This will charge a wages expense and create the wages payable liability. Ultimately on January 3 it will be paid. Wages for the two weeks are $100,000 and the 14 days has been passed for the pay period until year end of 2013.

5 0
3 years ago
In 20X8, the following pledges were made: $35,000 in unrestricted contributions for use in 20X8; $20,000 in contributions restri
Triss [41]

Answer: $455,000

Explanation:

As the question states what will be the pledges receivable for 20x8 therefore, we will calculate all the pledges:

$35,000 + $20,000 + $400,000 = $455,000

Hence, the answer is $455,000 as we take into account all the pledges for the year 20x8.

8 0
3 years ago
The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. Th
Anarel [89]

Answer:

Advertising Campaigns form part of Indirect Costs in an Income Statement.

It could be described as Marketing Costs, Adverts Costs or Adverts and promotion Costs. They all represent the same thing.

Advert costs are initiated to boost or build the equity of a brand, thus making it resonate freely in the minds of Consumers to enhance repeat purchases from them.

1. Implementation of Advert in the Medical Market

Changes to company's Profit $43,400

2. Implementation of Advert in the Dental Market

Changes to company's Profit $36,400

3 Advertising in the Medical Market yields a better profit. i would recommend advertising in the Medical Market

Explanation:

1. Implementation of Advert in the Medical Market

Increased Sales projections $49,000

Less Advert Costs -$5,600

Changes to company's Profit $43,400

2. Implementation of Advert in the Dental Market

Increased Sales projections $42,000

Less Advert Costs -$5,600

Changes to company's Profit $36,400

3. Going by the changes in Company Profit

The advertisement in the Medical Market yields a better profit. i would recommend advertising in the Medical Market

7 0
3 years ago
Knowing the educational requirements for a job you are interested in is very important. For example, to become a doctor would re
Ray Of Light [21]

Answer: It is very important because you need to be prepared to invest the time and money necessary to gain the required skills.

Explanation:

7 0
2 years ago
Able, Baker, and Carter have partnership capital account balances of $600000 each. Income and losses are shared equally. Carter
poizon [28]

Answer and Explanation:

The Journal entry is shown below:-

Carter's Capital Dr $600,000

                 To Able's Capital $450,000    (3 ÷ 4 × $600,000)

                To Baker's Capital $150,000

(Being Carter’s withdrawal from the partnership is recorded)

For recording this we debited the carter capital as it shows the withdrawn amount and credited the able capital and baker capital so that the total withdrawn collected from these partners could come

4 0
3 years ago
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