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Aleks04 [339]
3 years ago
9

(A bond forward) A certain 10-year bond is currently selling for $920 A friend of yours owns a forward contract on this bond tha

t has a delivery date in 1 year and a delivery price of s 940. The bond pays coupons of $ 80 every 6 months, with one due 6 months from now and another just before maturity of the forward. The current interest rates for 6 months and 1 year (compounded semiannually) are 7% and 8%. respectively (annual rates compounded every 6 months). What is the current value of the forward contract? First solve for the current forward price Ft of the bond:
Hint Ft d,M) に1 d(k,M) S=920 d(0, M)- d(2, M) c(k)- 80
Business
1 answer:
sleet_krkn [62]3 years ago
4 0

Answer: -$100

Explanation:

Value of forward contract = Selling price - Forward price on bond

Forward price = Present value of cashflows + Present value of bond

Periodic rate = 7%/ 2 = 3.5% per semi annum

= 8% / 2 = 4%

3.5% will be used to discount the payment 6 months from now as that is the 6 month rate. The rest will be 4%.

= (80 / (1 + 3.5%) ) + ( 80 / ( 1 + 4%)²) + (940 / ( 1 +4%)²)

= $1,020.342

= $1,020

Value of forward contract = 920 - 1,020

= -$100

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Suppose you are interested in studying whether scent affects spatial reasoning abilities. You decide to test spatial reasoning u
Brilliant_brown [7]

Answer: 1. c. There are no differences in the mean completion times among the scents compared

2. Scent; Completion Time

Explanation:

The Null Hypothesis of a research is that hypothesis which you aim to disprove because it holds that no significant relationship between the variables being researched exists.

In this scenario you are studying whether scent affects spatial reasoning abilities.

The Null Hypothesis will.be that which states that there is no relationship between scent and spartial reasoning therefore there will be no differences in the mean completion times among the scents compared.

The factor of interest is the variable that is being changed to examine a difference making it the SCENT in this scenario.

The dependent variable changes due to the Factor of Interest so it is the COMPLETION TIME.

6 0
4 years ago
At September 1, 2014, Promise Ring Co. reported stockholders' equity of $136,000. During the month, Promise Ring generated reven
yawa3891 [41]

Answer: $153,000

Explanation:

Stockholders' equity, also known as shareholders equity, is the book value of the organisation. In other words it is the assets left over after all liabilities have been deducted (Equity = Assets - Liabilities). This equity consists of 2 elements: The ordinary share equity (capital), which is the montary value of the shares issued by an organisation, and retained earnings, which is the amount of income left over after dividends have been paid out. In this case the stockholders equity is calculated as follows:

Opening balance: $136,000

Revenue for September: +$38,000

Expenses: - $21,000

Total: $153,000

Purchased equipment of $5,000 is not included in this figure, as it falls under assets and is accounted as such. Once accounted, then the total assets figure will be used to deduct liabilities from, and the balance must equal the shareholders equity ($153,000) above.

8 0
4 years ago
Your company buys a car, and its value goes down over time. What is that process called? A. Leasing B. Depreciation C. A unit of
stiv31 [10]

The answer is B Depreciation

4 0
3 years ago
Read 2 more answers
Nonuniform Inputs, Transferred-In Cost Drysdale Dairy produces a variety of dairy products. In Department 12, cream (transferred
Crazy boy [7]

Answer:

Explanation:

Opening units  30000

Started  120000

  150000

Closing  20000

Transffered  130000

   

   

                                            Production Table W.Avg Method  

   

   

                             A                   B                    C=A+B

Cost Element       Complete      Closing WIP  Equivellant production        

                                                                                                         units  

Material            130,000       20,000 (100%)                150,000  

Coversion Cost    130,000       10,000  (50%)                  140,000  

   

7 0
3 years ago
Your uncle has said that if you agree to finish college he will give you equal payments of $2,000 at the end of each year for th
il63 [147K]

Answer:

the value of the payments today is 14,047

Explanation:

this problem can be solved applying the concept of annuity, keep in mind that an annuity is a formula which allows you to calculate the present value of future payments affected by an interest rate. by definition the present value of an annuity is given by:

a_{n} =P*\frac{1-(1+i)^{-n} }{i}

where a_{n} is the present value of the annuity, i is the interest rate for every period payment, n is the number of payments, and P is the regular amount paid. so applying to this particular problem, we have:

a_{10} =2,000*\frac{1-(1+0.07)^{-10} }{0.07}

a_{10} =14,047

5 0
3 years ago
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