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kumpel [21]
2 years ago
10

As you read the business news, you come across an advertisement for a bond mutual fund – a fund that pools the investments fro

m a larger number of people and then purchases bonds, giving the individuals "shares" in the fund. The company claims their fund has had a return of 13½ percent over the last year. But you remember that interest rates have been pretty low – 5 percent at most. A quick check of the numbers in the business section you're holding tells you that your recollection is correct. Explain the logic behind the mutual fund's claim in the advertisement.
Business
1 answer:
Alika [10]2 years ago
6 0

Answer:

Follows are the solution to this question:

Explanation:

Follows are the two ways of describing its high return:

Firstly, the mutual fund is invested in pretty unstable debt and is reciprocating with greater yields for taking a risk.

Secondly, during every decrease in bond yields, the finance kept bonds so the income on stocks exceeded this same rate of interest significantly. Remember that bond costs skyrocket as interest rates drop as well as give the purchaser an investment income. Because once interest rates are now close to zero, it's also likely that they could increase as well as the owners would then lose their money. Its high return could be due to a drop in interest rates, and not only will it not be replicated, but the low or even low return will almost definitely be followed by either a rise in interest rates.

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Compared to other groups, the _______________ generational cohort is more likely to complain, need special attention, and take t
Vinvika [58]

Answer:

<u>Seniors </u>

Explanation:

The seniors generational cohorts refers to the generation that preceded the generation of baby boomers classified as those individuals who were born between 1946 and 1964.

The seniors generation is habitually complaining, something inherited from their witnessing times of wars and periods of uncertainties and financial distress.

This generation commands respect, special attention and at the same time are more miserly in their spending habits.

Also a common observation being, these individuals are not well familiar and adept with technological advancements such as gadgets, systems and modern day appliances in the sense they require more time to get used to them.

5 0
3 years ago
On December 29, 2005, BJ Co. sold an equity security investment that had been purchased on January 4, 2004. BJ owned no other ma
sineoko [7]

Answer:

AFS 2004 market price decline exceeded 2005 market price recovery

No No

The security cannot be classified as available-for-sale because the unrealized gains and losses are recognized in the Income Statement. Unrealized gains and losses on available-for-sale securities are recognized in owners' equity, not earnings.

The second part of the question is somewhat ambiguous. The 2004 price decline could exceed or be exceeded by the 2005 price recovery. The loss in the first year is not related in amount and does not constrain the realized gain in the second year.

The way to answer the question is to read the right column heading as implying that the earlier price decline must exceed the later price recovery. With that interpretation, the correct answer is no.

For example, assume a cost of $10 and a market value of $4 at the end of the first year. An unrealized loss of $6 is recognized in earnings. During the second year, the security is sold for $12. A realized gain of $8 is recognized-the increase in the market value from the end of the first year to the sale in the second year. Thus, the market decline in the first year did not exceed the recovery in year two. (It could have exceeded the recovery in year two but there is no requirement that it must.)

Explanation:

3 0
3 years ago
A corporation issued 5,000 shares of its $1 par value common stock in exchange for land (market value $30,000) and a building (m
olga2289 [7]

Answer:

The correct option is A,Debit Land and Building, $130,000; Credit Common Stock, $5,000; Credit Paid-in Capital in Excess of Par Value, Common Stock, $125,000.

Explanation:

The sum of the two market values of both land and building is $130,000($100,000+$30,000),which would be debited to land and building account to show that the asset has increased due to new acquisition.

In the common stock account the par value of the shares which is $5,000($1*5000) would be credited to it.

The difference between the market value of assets acquired and the common stock amount which is $125,000($130,000-$5,000) would be credited to paid in capital in excess of par account.

3 0
3 years ago
At the beginning of 2016, EZ Tech Company's Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful
meriva

Answer:

EZ Tech Company

Journal Entries:

Debit Cash Account $210,000

Credit Sales Revenue $210,000

To record sale of goods for cash.

Debit Accounts Receivable $840,000

Credit Sales Revenue $840,000

To record sale of goods on account.

Debit Cash Account $670,000

Credit Accounts Receivable $670,000

To record the receipt of cash on account.

Debit Uncollectible Expense $4,000

Credit Accounts Receivable $4,000

To record direct write-off of uncollectibles.

Explanation:

a) Accounts Receivable:

Beginning balance $140,000

Sales on credit         840,000

Cash receipts         -670,000

Uncollectible              -4,000

Ending balance    $306,000

b) The direct write-off of the uncollectible accounts could have also been treated through the Allowance for Doubtful Accounts by debiting the account before crediting it with the Uncollectible Expense account.  Since there is no instruction to the contrary, we have used the direct method instead, for simplicity.

3 0
3 years ago
A municipal bond carries a coupon of 6.75% and is trading at par. What is the equivalent taxable yield to a taxpayer in a combin
Bingel [31]

Answer:

10.23%

Explanation:

Formula for computation of equivalent taxable yield is r = rm/1-t. Where the tax rate is t, rm is Yield on municipal bond and r is Tax equivalent yield

r = rm/1-t

r = 6.75% / 1 - 34%

r = 6.75% / 0.66%

r = 10.22727272727273%

r = 10.23%

So, the equivalent taxable yield to a taxpayer in a combined federal plus state 34% tax bracket is 10.23%.

8 0
2 years ago
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