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MAVERICK [17]
2 years ago
6

A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change

in the price of this bond if the market yield to maturity rises to 6.7 percent from the current rate of 5.5 percent
Business
1 answer:
statuscvo [17]2 years ago
8 0

Answer: -10.14%

Explanation:

Original Price of bond:

Interest is paid semiannually so some variables need to be adjusted:

Period = 13 * 2= 26 semi annual periods

Coupon = 6% * 1,000 * 0.5 = $30 per period

Yield = 5.5% / 2 = 2.75%

Price = $1,046

Price after yield increases to 6.7%

Period = 13 * 2= 26 semi annual periods

Coupon = 6% * 1,000 * 0.5 = $30 per period

Yield = 6.7% / 2 = 3.35%

Price = $939.88

Percentage change = (939.88 - 1,046) / 1,046

= -10.14%

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An increase in the costs of resources or inputs of production would shift the ________.
nadya68 [22]

Answer:

C. short-run aggregate supply curve leftward

Explanation:

When the cost of production or inputs of production increase the short run supply curve shifts left because the producers are now willing to sell less at the same price because it is more expensive for them to produce, so at every price the production decreases because of which the supply curve shifts left. The long run supply curve isn't affected by an increase in costs of resources because it is the potential of the economy and an increase in costs of does not change the potential of the economy.

5 0
2 years ago
Backstreets Co. recently acquired all of Jungleland Inc.’s net assets in a business acquisition. The cash purchase price was $6.
sveta [45]

Answer:

The goodwill is $1.1 million

Explanation:

In this question, first we have to compute the net asset which is shown below:

Net asset = Total asset - total liabilities

where,

Total asset = Land + building + inventory

                  = $1.7 million + $3.4 million + $2.2 million

                  = $7.3 million

And, the total liabilities = long term note payable = $1.5 million

So, the net asset would equal to

= $7.3 million - $1.5 million

= $5.8 million

Now the goodwill equal to

=  Cash purchase price - net asset

= $6.8 million - $5.8 million

= $1.0 million

7 0
3 years ago
Zurasky Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below: Alternati
vichka [17]

Answer:

Differential cost of Alternative B over Alternative A=$61,600

Explanation:

Differential Cost:

It is the difference in costs if there are more than one alternatives and one alternative is chosen while rejecting the other alternatives.

In order to calculate the differential cost of Alternative B over Alternative A, including all of the relevant costs we first calculate the total cost of both alternatives and then tae the difference.

Total Of Alternative A=Material Cost+Processing Cost+Equipment Rental+occupancy costs.

Total Of Alternative A=$28000+$34000+$11000+$19500=$92,500

Total Of Alternative B=Material Cost+Processing Cost+Equipment Rental+occupancy costs.

Total Of Alternative B=$64000+$34000+$28500+$27600=$154,100

Differential cost of Alternative B over Alternative A=Total Of Alternative B-Total Of Alternative A

Differential cost of Alternative B over Alternative A=$154,100-$92,500

Differential cost of Alternative B over Alternative A=$61,600

5 0
3 years ago
If when the price of product e decreases by 2%, this causes its quantity demanded to increase by 14% and the quantity demanded f
hodyreva [135]
Cross elasticity of demand measures the responsiveness in the quantity demand of one good when a change in price takes place in another commodity or good. It is calculated by dividing the percentage change in the quantity demanded of one good by the percentage change in price of other good.
Therefore, in this case, cross elasticity of demand will be;
   17%/-2% = - 8.5   (-2% because its a decrease)
Thus , the elasticity will be -8.5
3 0
3 years ago
Bond prices depend on the market rate of​ interest, stated rate of​ interest, and time. Determine whether the following bonds pa
Aleksandr-060686 [28]

Answer:

Determine whether the following bonds payable will be issued at face​ value, at a​ premium, or at a​ discount:

a.The market interest rate is​ 8%. Idaho issues bonds payable with a stated rate of​ 7.75%.

  • Bonds issued at discount because market rate is higher than the bond's coupon rate.

b.Austin issued​ 9% bonds payable when the market interest rate was​ 8.25%.

  • Bonds issued at premium because market rate is lower than the bond's coupon rate.

c.​Cleveland's Cars issued​ 10% bonds when the market interest rate was​ 10%.

  • Bonds issued at par because bond's coupon rate is equal to the market rate.

d.​Atlanta's Tourism issued bonds payable that pay the stated interest rate of​ 8.5%. At​ issuance, the market interest rate was​ 10.25%.

  • Bonds issued at discount because market rate is higher than the bond's coupon rate.

8 0
3 years ago
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