1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
8090 [49]
3 years ago
8

A bond has a modified duration of 8 and a price of 112,955 calculated using an annual effective interest rate of 6.4%. EMAC is t

he estimated price of this bond at an interest rate of 7.0% using the first-order Macaulay approximation EMOD is the estimated price of this bond at an interest rate of 7.0% using the first-order modified approximation Calculate EC EMOD A. 91 B. 102 C. 116 D. 127 E. 143
Business
1 answer:
quester [9]3 years ago
5 0

Answer:

Option E (143) is the appropriate solution.

Explanation:

According to the question,

The modified duration will be:

= \frac{Macaulay \ duration}{(1+yield)}

= 8\times 1.064

= 8.512

The percentage change in price will be:

= -0.6\times 8 \ percent

= -4.8 (%)

Now,

The EMOD will be:

= 112955\times (1-4.8 \ percent)

= 107533.2 ($)

Or,

The EMAC will be:

= 112955\times (\frac{1.064}{1.07} )^{8.512}

= 107675.7 ($)

Hence,

⇒ EMOD-EMAC=107533.2-107675.7

                                  =-142.5

⇒ EMAC-EMOD=143

You might be interested in
Dusty is evaluating two bids to supply fence hardware for the 5 acres of pasture that need to be fenced. breezy submits a bid of
Allushta [10]
Let us see it from a cost-efficiency point of view. We have that every unit of the first selles costs 40$. But the total cost might be higher, since there is a chance for defect. On average, on 3% of the cases the defect will happen and it will cost him 500$. Hence, on average, a fence unit from producer a costs 40$ and has a repair cost of 3%*500$=15$. The total thus is 55$. For the second provider of fences, the standard cost is 50$. Similarly, the average repair cost is 0,5%*500$=2,5$. Hence, the total cost per unit is 52,5$ (total cost=upfront payment+repair costs). We see thus that the lady should win the bid; even if you pay more upfront, the difference in durability makes up the cost difference.
6 0
3 years ago
Read 2 more answers
Journalize the following transactions for Pharoah Company. (If no entry is required, select "No Entry" for the account titles an
alexandr1967 [171]

Answer:

Journalize the following transactions for Pharoah Company.

Explanation:

1.  

Supllies                             1050  

Cash                                  1050

5.  

Retained earnings              440  

dividen Payable                  440

7.  

Cash                            5800  

deferred revenue                 5800

16.  

Cash                             800  

Account receivable           800

33.  

Equipment                    3300  

cash                                    1250

Account  payable                   2050

6 0
2 years ago
Read 2 more answers
YO Easy question for all
kondaur [170]

Answer:

can you like explain itmore like you understand

3 0
2 years ago
How would you make a convincing case that open trade in goods and services as well as free flow of foreign direct investment wil
lidiya [134]

Answer:

Free trade of goods and services benefits all countries in the world. This is because of the concept of comparative advantage that tells us that some countries are better at providing specific goods and services than others.

For example, Japan is made up of relatively small islands that are very mountainous, forested, and lacking in natural resources. Besides, the country has a large population concentrated in the few flat areas. This essentially means that Japan is severly lacking in agricultural land and raw materials, and has to import most of its food, oil, natural gas, among other things. This is why the country has specialized in electronics, automobiles, and pharmaceuticals.

Brazil is the opposite: a very large country with hundreds of thousands of square miles fit for agricultural production. The country is a great exporter of soy, rice, sugar, and oil. However, the brazilian industry is not competitive, and most of its exports are to neighboring Argentina.

Without free trade, Japan could hardly feed itself, or it would do so with great difficulty. At the same time, Brazil would have a large surplus of food and raw materials, but its citizens would lack access to high-tech Japanese goods such as Toyota cars, or Sony electronic devices. Both countries would be worse-off.

5 0
3 years ago
Differentiation business strategies are often associated with premium prices. There are, however, reasons why a firm would NOT w
Natalija [7]

Answer: e. To drive up market share

Explanation:

Differentiation strategies involve adding features to a good to make it stand out from the Competition. Since these features are usually beneficial, the value of the good goes up and the company selling them can charge more. This is the main way things are done in Monopolistic markets.

However, sometimes it is best to charge the same price the Competition is charging even though you have a better product. This way the company is able to capture Market Share because the consumers will believe they are getting a better value for their money. For instance, if a company was selling Toyotas at $2,000 and it's competitor was selling the same Toyota but with 2 extra tires for the same $2,000 who would you use? The Competitor most likely.

This is why a firm might want to keep prices in line with competitors.

4 0
3 years ago
Other questions:
  • Holiday Inn would like to estimate the satisfaction level of its customers. A sample of 25 hotels were selected and the customer
    6·1 answer
  • Which of the following would be considered a career in science?
    7·2 answers
  • Which of the following statements is true of the methods for allocating joint costs? The sales value at splitoff method allocate
    10·1 answer
  • Trompenaars found that a(n) _____ organizational culture is common in countries such as Turkey, Pakistan, Venezuela, China, Hong
    14·1 answer
  • A major reason outsourcing is effective is that a. few firms possess superior capability in all primary and support activities.
    6·1 answer
  • (1) (2) (3) DI C DI C DI C $ 0 $ 4 $ 0 $ 65 $ 0 $ 2 10 11 80 125 20 20 20 18 160 185 40 38 30 25 240 245 60 56 40 32 320 305 80
    7·1 answer
  • Travers Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these
    14·1 answer
  • What are the aims of standardization
    10·1 answer
  • What advice would you give David to help him communicate ethically and responsibly? Check all that apply
    14·1 answer
  • a. The equality of MR and MC is essential for profit maximization in all market structures because if
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!