Answer:
a) ≈ 9.6 years
b) Modified duration is a better measure because Modified duration consider the concept of negative convexity
c) i) coupon of bond = 4%
Modified duration will increase since the coupon rate of payment decreased
ii) Maturity of bond = 7
Modified duration will decline as Maturity period has declined to 7 years
Explanation:
A) Calculate modified duration using the preceding information
modified duration = Macaulay duration / ( 1 + (yield to maturity / 2 ))
= 10 / ( 1 + ( 0.08 / 2 ))
= 9.615 years
B) Modified duration is a better measure because Modified duration consider the concept of negative convexity while Macaulay methods shows the inverse relationship between the duration of the bond and coupon payment .
<u>C) Determine Direction of change in modified duration if </u>
i) coupon of bond = 4%
Modified duration will increase since the coupon rate of payment decreased
ii) Maturity of bond = 7
Modified duration will decline as Maturity period has declined to 7 years
Answer:
$40,500
Explanation:
The computation of the bill payment paid by the insurance is shown below"
= Medical bill incurred cost × percentage given + deductible amount
= $50,000 × 80% + $500
= $40,000 + $500
= $40,500
We simply added the medical bill insured cost based on the percentage and the deductible amount so that the accurate amount can come
Answer: I)Accrued ReVenue /Service Revenue.
2.-Prepaid Expenses/ Insurance Expenses
3.No Entry
4.Prepaid expenses /depreciation expense
5.Accrued Interest payable/Interest Expenses
6.Accrued expenses/ Interest expenses.
7.Unearned expenses/ Service Revenue
Explanation:The type of adjusting entry/ the related account in the adjusting entry is given below
a)For Accounts Receivable---Accrued ReVenue /Service Revenue.
(b) For Prepaid Insurance---Prepaid Expenses/ Insurance Expenses
(c) Equipment ---- Equipment Exoenses. Equipment is a long-term asset that will not last so the cost of equipment is recorded in the account Equipment. No entry is needed in this account.
(d) For Accumulated Depreciation Equipment-----Prepaid expenses /depreciation expense
e) Notes Payable : Accrued Interest payable/ Interest Expenses
(f) Interest Payable--- Accrued expenses/ Interest expenses
(g) Unearned Service Revenue--Unearned expenses/ Service Revenue
