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lora16 [44]
2 years ago
13

A $ 5000 bond with a coupon rate of 6.7​% paid semiannually has eight years to maturity and a yield to maturity of 7.8​%. If int

erest rates rise and the yield to maturity increases to 8.1​%, what will happen to the price of the​ bond?
Business
1 answer:
prohojiy [21]2 years ago
7 0

Answer:

As a result of an increase in the YTM, the price of the bond will fall $4677.19 from to $4593.67

Explanation:

The bonds are valued or priced based on the present value of annuity of interest payments and the present value of the principal. Based on the YTM of 7.8% the bonds are priced at,

coupon payment = 5000 * 0.067 *1/2  =  $167.5

Semiannual YTM = 7.8 *0.5  =  3.9%

Semi annual periods to maturity = 8 * 2  =  16 periods

Old Price = 167.5 * [( 1 - (1 + 0.039)^-16  + 5000 / (1+0.039)^16

Old Price = $4677.19

New semiannual YTM = 8.1% / 2  =  4.05%

New Price = 167.5 * [( 1 - (1+0.0405)^-16) / 0.0405] + 5000 / 1.0405^16

New Price = $4593.67

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Difference between relative and absolute scarcity
Arisa [49]

Answer: Relative scarcity could be described as that where the resources are limited in supply for a short while, due to manufacturing or supply challenges.

Absolute scarcity could he described as where supply is naturally limited. No possibility of the supply increasing.

Explanation:

Relative scarcity could be described as that where the resources are limited in supply for a short while, due to manufacturing or supply challenges.

Absolute scarcity could he described as where supply is naturally limited. No possibility of the supply increasing.

In relative scarcity, there is a probability of the supply to be made available later while in absolute, there is no possibility of it happening.

7 0
2 years ago
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products
Mazyrski [523]

Answer:

1.1 substitutes do not market together

-0.35 complements market together

Explanation:

1.1

-0.35

Cross price elasticity of demand measures the responsiveness of quantity demanded of good A to changes in price of good B.

If cross price elasticity of demand is positive, it means that the goods are substitute goods.

Substitute goods are goods that can be used in place of another good.

if the price of a good increases, the demand for the substitute increases and if the price of the good reduces, the demand for the substitute increases.

If the cross-price elasticity is negative, it means that the goods are complementary goods.

Complementary goods are goods that are consumed together

Cross price elasticity = percentage change in quantity demanded of good A / percentage change in the price of good B

Frizzles = -22% / -20% = 1.1

Mookies = 7 / -20 = -0.35

5 0
2 years ago
If four people of the same age each have the same education and skills, which will likely earn the greatest
erma4kov [3.2K]

Answer:

metro area in the north

Explanation:

more business and big cities like new york (just an example)

6 0
2 years ago
Michael owns a machine shop. In reviewing the shop's utility bills for the past 12 months, he found that the highest bill of $2,
Citrus2011 [14]

Answer:

Instructions are below.

Explanation:

Giving the following information:

Highest cost= $2,400 when the machines worked 1,000 machine hours.

Lowest cost= $2,200 when the machines worked 500 machine hours.

<u>To calculate the variable cost per unit and total fixed costs, we need to use the following formulas:</u>

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (2,400 - 2,200) / (1,000 - 500)

Variable cost per unit= $0.4 per hour

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 2,400 - (0.4*1,000)= $2,000

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 2,200 - (0.4*500)= $2,000

Total cost= 2,000 + 0.4x

x= machine hour

<u>Finally, the total cost for 1,200 machine hours:</u>

Total cost= 2,000 + 0.4*1,200

Total cost= $2,480

7 0
3 years ago
GoCarts Systems pays $3,500 cash for next year's publication subscription which is known as a(n) _________. During the same week
Lyrx [107]

Answer:

Deferral

Accrual

Explanation:

A deferral occurs when a company has paid out money that should be reported as an expense in a later accounting period, and/or received money that should be reported as revenue in a later accounting period while an Accrual pertains to expenses that should be reported now, but have not yet been recorded or paid, and revenues that should be reported now, but have not yet been recorded nor has the money been received.

6 0
3 years ago
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