Answer:
C) Capital items
Explanation:
Capital items are the goods that should have physical existence also it is to be used at the time of manufacturing the product and services. It involves various items like - building, equipment, tools, etc
These are not categorized into a finished goods but are used for making the finished goods
Therefore in the given situation, the option C is the most appropriate and hence the same is to be considered
An increase in the supply of money will lead to a(n) _____ in equilibrium real GDP and a _____ equilibrium interest rate.
Answer:
Increase and decrease
Increase, decrease.
The following information should be considered:
In the case when there is an increase in the supply of money so there should be increasein the real GDP. While on the same time, there is the decrease in the rate of interest.Learn more: brainly.com/question/17429689
Pestiferous Manufacturing produces a chemical pesticide and uses process costing. There are three processing departmentslong dashMixing, Refining, and Packaging. On January 1, the first departmentlong dashMixinglong dashhad no beginning inventory. During January, 47,000 fl. oz. of chemicals were started in production. Of these, 38,000 fl. oz. were completed, and 9,000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly throughout the process. At the end of January, the equivalent unit data for the Mixing Department were as follows: UNITS Equivalent Units Equivalent Units Units to be accounted for Direct Materials Costs Conversion Costs Completed and transferred out 38,000 38,000 38,000 Ending workminusinminusprocess* 9,000 9,000 3,960 47,000 47,000 41,960 * Percent complete for conversion costs: 44% In addition to the above, the cost per equivalent unit were $ 1.35 for direct materials and $ 5.20 for conversion costs. Using this data, calculate the full cost of the ending WIP balance in the Mixing Department. The weightedminusaverage method is used.
A. $ 63,450
B. $ 41,960
C. $ 32,742
D. $ 12,150
Answer:
C. $ 32,742
Explanation:
The cost per equivalent unit were $ 1.35 for direct materials and $ 5.20 for conversion costs.
The Ending Work In Process has Equivalent Units 9000 complete as to materials and 44% complete as to Conversion Costs.
So the costs will be
Materials = 9000 *100% * $ 1.35 = $ 12150
Conversion = 9000 * 44% * 5.20 = $ 20592
Total Costs $ 32742
The Ending Work in Process costs are found by multiplying the unit costs with the Equivalent number of units multiplied with the percentage of completion.
Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 4,000 tons of plastic and sold 3,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were $2,800,000, and fixed administrative expenses were $500,000.
Prepare income statements for each year using absorption costing.
Answer:
Instructions are below.
Explanation:
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
First, we need to calculate the unitary production cost:
Unitary fixed overhead= 2,800,000/4,000= $700
Unitary cost= (2,000*0.15) + 700= $1,000
Income statement:
Sales= 3,500*2,000= 7,000,000
COGS= 3,500*1,000= (3,500,000)
Gross margin= 3,500,000
Total selling expenses= (7,000,000*0.1)= (700,000)
Total administrative expenses= (500,000)
Net operating income= 2,300,000
Under FINRA rules, to recommend a direct participation program to a customer, the registered representative must ascertain that the customer:_______.
Answer:
has a fair market net worth sufficient to sustain the risks of the program.
Explanation:
FINRA is an acronym for Financial Industry Regulatory Authority. It is a non-profit agency in the United States of America, which is saddled with the responsibility of handling the licensing and regulation of broker-dealers in securities.
A direct participation program (DPP) can be defined as a financial security which gives an investor (customer) access to the cash flow and tax benefits of a business venture.
Under FINRA rules, to recommend a direct participation program (DPP) to a customer, the registered representative must ascertain and ensure that the customer has a fair market net worth that is considered to be sufficient to sustain the risks associated with the program, including loss of investment and lack of liquidity.
A weaker dollar benefits_______and hurts______.
A. Foreign businesses; American consumers.
B. American consumers; American businesses.
C. American businesses; American consumers.
D. American businesses; Foreign consumers.
Answer:
C. American businesses; American consumers.
Explanation:
Currently so many businesses of America are overseas, approximately 40%.
Now when the dollar turns weak these businesses are benefited in a manner that is the buyers needs to pay more for such deals.
Further with this as the buyers needs to pay more, even in the country the imported goods turns expensive as dollars decrease their value.
Accordingly, it is the american business man who gets benefited with weaker dollar, and the american consumer has to pay more for this.
All of the following would decrease demand for furry boots except: A. the price of shoes goes down. B. people prefer boots without fur. C. the price of furry boots goes up. D. people expect the boots to go out of style soon. E. a very warm winter has been forecasted.
Answer:
The correct answer is:
the price of shoes goes down. (A)
Explanation:
The most important determinant of demand is price. An increase in price without accompanying income to the consumer leads to a reduction in demand because more money is needed to purchase a unit of the product hence to make up for the change, the quantity demanded (purchased) reduces. On the other hand, if the price reduces, the consumer spends lesser for the same units of product, therefore he/she can afford more quantity with the same price, hence demand increases. Therefore if the price of furry boots go down, the quantity demanded increases.
After receiving a reward for information leading to the arrest of a notorious criminal, you are considering investing it in an annuity that pays $5,000 at the end of each year for 20 years. You could earn 5% on your money in other investments with equal risk. What is the most you should pay for the annuity
Answer:
The maximum that should be paid for this annuity today is $62311.05
Explanation:
To calculate the maximum that should be paid for the annuity, we will calculate the present value of annuity. As the cash flow from annuity occur at the end of the period, it is an ordinary annuity. The formula for the present value of ordinary annuity is attached.
Present value = 5000 * [ 1 - (1+0.05)^-20 / 0.05 ]
Present value = $62311.05171 rounded off to $62311.05
Consider the statements. Indicate whether each statement falls mainly under the field of microeconomics or macroeconomics.
1. A tax on tires increases the price of tires Microeconomics Macroeconomics
paid by car owners.
2. As a result of a severe recession, the total
output gross domestic product of a nation falls
by 4%.
3. Increased consumer spending causes the
national unemployment rate to fall.
4. Increased consumer spending causes the rate
of rate of inflation to rise
5. Optimism about future car sales leads General
Motors to hire more auto workers.
6. Robotic technology reduces the demand for auto
workers.
Answer:
1. Microeconomics
2. Macroeconomics
3. Macroeconomics
4. Macroeconomics
5. Microeconomics
6. Microeconomics
Explanation:
Macroeconomics can be described as the study of the behavior of an overall economy. Macroeconomics studies issues that are related to the whole economy such as changes in unemployment, economic growth rate, national income, inflation, price levels, and gross domestic product (GDP).
On the other hand, Microeconomics can be described as the behavior of economic agents such as individuals and firms as regards their decision making relating the scarce resources allocation and the interactions among the economic agents.
Based on the above explanation, we can have the following categorizations:
1. A tax on tires increases the price of tires paid by car owners. This is Microeconomics because it concerns the behavior of individuals, i.e., car owners.
2. As a result of a severe recession, the total output gross domestic product of a nation falls by 4%.. This Macroeconomics because it concerns the gross domestic product which total values of goods produced in an economy.
3. Increased consumer spending causes the national unemployment rate to fall. This is Macroeconomics because it relates the national unemployment.
4. Increased consumer spending causes the rate of rate of inflation to rise. This is Macroeconomics because it relates an increase in inflation rate.
5. Optimism about future car sales leads General Motors to hire more auto workers. This is Microeconomics because it relates to the decision and action of a firm, i.e. General Motors.
6. Robotic technology reduces the demand for auto workers.This is Microeconomics because it relates to the decision and action of individuals, i.e. auto workers.
Based on the definitions of microeconomics and macroeconomics, the statements below fall under:
Macroeconomics:
2. As a result of a severe recession, the total output gross domestic product of a nation falls by 4%. 3. Increased consumer spending causes the national unemployment rate to fall. 4. Increased consumer spending causes the rate of inflation to riseMicroeconomics:
1. A tax on tires increases the price of tires paid by car owners.5. Optimism about future car sales leads General Motors to hire more auto workers.6. Robotic technology reduces the demand for auto workers.Macroeconomics relates to issues that affects the economy as a whole as opposed to a single industry or firm. A decrease in GDP, issues regarding national unemployment and inflation rising are therefore macroeconomic as they affect the entire economy.
Microeconomics on the other hand, relates to issues affecting an industry or only a single entity. This is why the other entries are microeconomics as they relate to a single industry.
Find out more at https://brainly.com/question/21123344.
Which of the following is not a potential problem when estimating and using betas, i.e., which statement is false?
A. The beta of an "average stock," or "the market," can change over time, sometimes drastically.
B. Sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different from the "true" or "expected future" beta.
C. The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. This calculated historical beta may differ from the beta that exists in the future.
D. The fact that a security or project may not have a past history that can be used as the basis for calculating beta.
E. Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.
Answer:
a.) The beta of an "average stock," or "the market," can change over time, sometimes drastically.
Explanation:
Estimation using betas in finance can be associated to the (CAMP) Capital Asset Pricing Model, it allows the calculation of volatility of the stock in relation to the market.
It should be noted that there are potential problems that can be experienced when estimating and using betas, and these are;
1) Sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different from the "true" or "expected future" beta.
2)The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. This calculated historical beta may differ from the beta that exists in the future.
3)The fact that a security or project may not have a past history that can be used as the basis for calculating beta.
4) Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.
Hence among the given option, option A is false.
Imagine that you are holding 5,000 shares of stock, currently selling at $40 per share. You are ready to sell the shares but would prefer to put off the sale until next year for tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January call options with a strike of $45 are selling at $2, and January puts with a strike price of $35 are selling at $3.
1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at:
(a) $30
(b) $40
(c) $50
2. Compare these proceeds to what you would realize if you simply continued to hold the shares.
Answer:
1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at:
(a) $30 ⇒ $170,000
(b) $40 ⇒ $195,000
(c) $50 ⇒ $220,000
call strike price $45
call premium received $2
put strike price $35
put premium paid $3
you pay $2 - $3 = -$1
stock price
$30 $40 $50
stock value $30 $40 $50
put value $5 - -
call value - - -$5
premium paid -$1 -$1 -$1
net stock value $34 $39 $44
total # of stocks 5,000 5,000 5,000
portfolio's value $170,000 $195,000 $220,000
2. Compare these proceeds to what you would realize if you simply continued to hold the shares.
if you hold the stocks:
(a) $30 ⇒ $150,000 - $170,000 = -$20,000 (you gain by using a collar)
(b) $40 ⇒ $200,000 - $195,000 = $5,000 (you lose by using a collar)
(c) $50 ⇒ $250,000 - $220,000 = $30,000 (you lose by using a collar)
A firm can produce steel with or without a filter on its smokestack. If it produces without a filter, the external costs on the community are $ 500,000 per year. If it produces with a filter, there are no external costs on the community, and the firm will incur an annual fixed cost of $ 300,000 for the filter. Use the Coase Theorem to answer how costless bargaining will lead to a socially efficient outcome, if the property rights are owned by the community. A. the community will have an incentive to pay the firm some price above $ 300,000 (perhaps $ 499,999) to induce the firm to install the filter. B. The firm would install the filter at a cost of $ 300,000. C. the socially efficient outcome is for the firm to not install the filter
Answer: B. The firm would install the filter at a cost of $ 300,000.
Explanation:
If the community owns the property rights, they would be able to demand that the firm pay the external cost of $500,000 per year.
If on the other hand the company installed a filter, it would cost them $300,000 but then they would not have to pay the community the $500,000.
The lower cost option would be to install the filter for $300,000 which is what the firm would do.
When making decisions, managers should consider all relevant benefits and relevant costs, which include: (Check all that apply.)
Answer: e. a, b and c
Explanation:
Opportunity costs are very important costs to look at because they help a company know if they are picking the best alternative available to them.
Out-of-pocket costs are also quite important because the company needs to know if there is a chance that they will have to pay for special features in the project that are not part of the original project but need to be paid for anyway as these monies come out of the cash reserve.
Incremental costs focus on the additional costs involved in a project and so are very important. When making a decision for processing a good further for instance, management needs to know if the incremental cost will be covered by the extra profit that will be gained.
When making decisions, managers should consider all relevant benefits and relevant costs, which include:
a. Opportunity costs
b. Out-of-pocket costs
c. Incremental costs
The correct answer is: e. a, b, and c
What is the decisions making?Direct costs are the specific expenses that are directly linked to a decision or action. They include the cost of materials, the payment for labor, and the cost of equipment.
Indirect costs are expenses that are not directly related to a specific decision but still affect the overall decision-making process. These can be expenses like rent, salaries, or other costs needed to run a business or organization.
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When making decisions, managers should consider all relevant benefits and relevant costs, which include: (Check all that apply.)
a. Opportunity costs
b. Out-of-pocket costs
c. Incremental costs
d. Sunk costs
e. a, b and c
f. Of All of the above
A company's income before interest expense and income taxes is $200,000 and its interest expense is $70,000. Its times interest earned ratio is:__________
Answer:
2.86
Explanation:
The times interest earned ratio is used basically to measure a firm's capacity to pay up it's debt. In other words, it is a covenant for loan which is primarily used by lenders to their debtors.
Times interest earned is calculated by dividing income before interest expense and income taxes by interest expense
= $200,000 / $70,000
= 2.86
Headland Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed. Vacation Pay to Earnings to Weekly Be Received Employee July 31 Pay in August Mark Hamill $5,320 $290Karen Robbins 4,620 240 $480Brent Kirk 3,820 200 400Alec Guinness 8,520 340Ken Sprouse 9,120 420 840 Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $8,120 maximum. The FICA rate is 7.65% on employee and employer on a maximum of $107,920 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee’s wages in excess of $107,920.
Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company’s liability are made separately. Also make the entry to record the monthly payment of accrued payroll liabilities.
Answer:
accumulated to July 31 Weekly Pay Vacation Pay
Mark Hamill $5,320 $290
Karen Robbins $4,620 $240 $480
Brent Kirk $3,820 $200 $400
Alec Guinness $8,520 $340
Ken Sprouse $9,120 $420 $840
Entries for wages expenses:
Weeks 1 and 4:
Dr Wages expense 1,490
Cr Federal income tax withholdings payable 149
Cr FICA taxes withholdings payable 113.99
Cr Union dues withholdings payable 29.80
Cr Cash 1,197.21
Weeks 2 and 3:
Dr Wages expense 630
Dr vacation wages expense 860
Cr Federal income tax withholdings payable 149
Cr FICA taxes withholdings payable 113.99
Cr Union dues withholdings payable 29.80
Cr Cash 1,197.21
Entries for wages expenses:
Weeks 1, 2, 3 and 4:
Dr FICA tax expense 113.99
Dr FUTA tax expense 5.84
Dr SUTA tax expense 18.25
Cr FICA tax payable 113.99
Cr FUTA tax payable 5.84
Cr SUTA tax payable 18.25
Since taxes and other expenses are paid once a month, the journal entry to record their payment:
Dr Federal income tax withholdings payable 596
Dr FICA tax payable 455.96
Dr FICA taxes withholdings payable 455.96
Dr Union dues withholdings payable 119.20
Dr FUTA tax payable 23.36
Dr SUTA tax payable 73
Cr Cash 1,723.48
Which of the following is NOT a standard approach to writing body copy? A) straightforward B) narrative C) alliteration D) translation E) explanation
Answer:
C. Alliteration
Explanation:
Hope this helps!
The __________ component deals with the management and control of the ways entities are granted access to resources.
Answer:
Access management
Explanation:
The "access management" component deals with the management and control of the ways entities are granted access to resources.
Access management regulates the ways and methods entities are granted access to resources. It determines which user is able to access the resources.
Company expected to incur $9,450 in manufacturing overhead costs and use 4,500 machine hours for the year. Actual manufacturing overhead was $9,400 and the company used 5,050 machine hours.
1. Calculate the predetermined overhead allocation rate using machine hours as the allocation base.
_______ / _________ = Predetermined overhead allocation rate
________/ __________ = ____ per machine hour
2. How much manufacturing overhead was allocated during the? year?
________ x ________ = overhead allocated
________ x _________ = ____________
Answer:
1.Predetermined overhead allocation rate = $2.10 per Machine Hour
2.Overhead allocated = $10,605
Explanation:
1. Predetermined overhead allocation rate
using
Estimated manufacturing overhead costs / Estimated Machine Hours = Predetermined overhead allocation rate
=$9,450 / 4,500 Machine Hours = $2.10 per machine hour
Therefore,
Predetermined overhead allocation rate = $2.10 per Machine Hour
2. Manufacturing overhead allocated during the year
Actual Machine Hours Used x Predetermined overhead allocation rate = Overhead allocated
5,050 machine hours x $2.10 per Machine Hour = $10,605
Therefore,
Overhead allocated = $10,605
What financial reporting issues would arise as a result of making a foreign direct investment?
Answer: Converting foreign GAAP to the parent company GAAP; Translating currency.
Explanation:
A foreign direct investment is simply an investment that is made by a particular individual or firm in a particular nation even though the interests of the business are being located in another nation.
The financial reporting issues would arise as a result of making a foreign direct investment are the conversion of foreign GAAP to the parent company GAAP and the translation of currency.
Expected loss for an overbooking reservation strategy would be calculated by multiplying the loss for each no-show possibility and its probability of occurrence, and then adding the products.a) trueb) false
Answer: True
Explanation:
An overbooking strategy simply has to do with hotels booking more rooms than what is available because they know that some of the reservations will be cancelled.
The Expected loss for an overbooking reservation strategy would be calculated by multiplying the loss for each no-show possibility and its probability of occurrence, and then adding the products.
Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the net income of the investor under the Fair Value Method and the Equity Method, respectively?
Answer:
Under the equity method, cash dividends reduce the carrying value of the investment account (asset account), they are not considered income. For e.g.
Journal entry to record investment
Dr Investment in Santo Corporation 100,000
Cr Cash 100,000
Journal entry to record cash dividend
Dr Cash 5,000
Cr Investment in Santo Corporation 5,000
Under the fair value method, cash dividends are considered income, therefore, they increase net income. For e.g.
Journal entry to record investment
Dr Investment in Santo Corporation 100,000
Cr Cash 100,000
Journal entry to record cash dividend
Dr Cash 5,000
Cr Dividend income 5,000
If you wish to have $60,000 in 8 years, how much do you need to deposit in the bank today if the account pays an interest rate of 9%
Answer:
PV= $30,111.98
Explanation:
Giving the following information:
Future value= $60,000
Number of periods= 8
Interest rate= 9%
To calculate the initial investment, we need to use the following formula:
FV= PV*(1+i)^n
Isolating PV:
PV= FV/(1+i)^n
PV= 60,000 / 1.09^8
PV= 30,111.98
McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 5.75% coupon paid semiannually (2.875% each 6 months), and those bonds sell at their par value. McCurdy's Class P bonds have the same risk, maturity, and par value, but the P bonds pay a 5.75% annual coupon. Neither bond is callable. At what price should the annual payment bond sell
Answer:
$993.08
Explanation:
the market interest is 2.875% semiannual, that is why Q bonds are sold at par. To determine the value of P bonds we must add the present value of the face value and the coupon payments:
the effective interest rate = (1 + 5.75%/2)² - 1 = 5.83%
PV of face value = $1,000 / (1 + 5.83%)¹² = $1,000 / 1.974405523 = $506.48
PV of coupon payments = $57.50 x 8.46254 (PV annuity factor, 5.83%, 112 periods) = $486.60
market price = $993.08
According to globalization opponents, what has increased in wealthy advanced economies as a result of globalization
Answer: A. unemployment
Explanation:
Globalization opponents in developed countries believe that unemployment has increased in developed countries due to globalization.
They point to the importation of goods and services at a cheaper rate than would have been produced in the developed country thereby causing factories and firms that produce said goods and services to either reduce their workforce or close down to avoid making losses.
Some companies such as Nike also preferred to outsource their production to developing areas like South-east Asia to reduce labor costs. These were jobs that opponents of globalization believe would have remained in developed countries if not for globalization.
Last year Electric Autos had sales of $175 million and assets at the start of the year of $300 million. If its return on start-of-year assets was 15%, what was its operating profit margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)
Answer:
Operating profit margin = 25.71%
Explanation:
Amount of return on asset = Rate of return x Asset value
Amount of return on asset = 15% x $300,000,000
Amount of return on asset = $45,000,000
Operating profit margin = Amount of return on asset / Sales
Operating profit margin = $45,000,000 / $175,000,000
Operating profit margin = 0.257143
Operating profit margin = 25.71%
Reeve has worked as an administrator with employer-sponsored health insurance at Big Company for 10 years and has been diagnosed with a serious heart condition. An offer for a great job at Up and Coming Company with great opportunities for advancement, although it pays slightly less, has been extended to Reeve. Up and Coming has health insurance, but the insurance coverage excludes any preexisting health condition for six months. Reeve says that taking the job at Up and Coming would make continuing health insurance from Big Company unaffordable. Up and Coming wants Reeve to start immediately. What would you advise Reeve to consider?
Answer:
My advice would be for Reeve to take up the job offer at Up and Coming Company and engage in the private health insurance of himself pending when he would be eligible to be enrolled in a sponsored health insurance in his new company.
Explanation:
Which one of the following is not something that shapes the fundamental character of a company's corporate culture?
A. The nature and character of the actions the company is taking to improve the performance of its value chain activities
B. How managers and employees interact and relate to one another and the atmosphere and spirit that pervades the company's work climate
C. The core values, ethical standards, and business principles that executives preach and practice
D. The strength of peer pressures to do things in particular ways and conform to expected norms .
E. The company's approach to people management and the company's revered traditions and oft-repeated stories about "heroic acts" and "how we do things around here and why we do them that way
Answer:
A. The nature and character of the actions the company is taking to improve the performance of its value chain activities
Explanation:
The corporate culture of a company is essential for a company to be well positioned in the market.
It is defined as the set of guidelines that will guide the behavior of the employees of an organization, therefore it is composed of the set of policies, rules, procedures, behaviors, values, etc., that bring identity to a company and helps the practice of ethical values and promotion development of each employee.
Therefore, all the alternatives in the question above are adequate to the organizational culture, except for the letter A, which corresponds to the nature and character of the actions that the company is taking to improve the performance of its value chain activities, since the management of the supply chain A company's value will improve the way the processes in the organization are carried out to generate value for the customer.
If a nation has a higher level of technology than another nation it means that they will be able to produce:
Answer: b. more outputs with the same inputs.
Explanation:
Better technology means that labor will be more efficient in the production of goods and services. A country with a higher level of technology therefore will be more efficient in production than a country that is not and this will lead to them producing more output with the same input than the other country.
For instance, a country with technology that is able to reduce the wastage of wood will produce more furniture than a country without that technology.
A bond with a 8-year duration is worth $1,077, and its yield to maturity is 7.7%. If the yield to maturity falls to 7.57%, you would predict that the new value of the bond will be approximately _________.
Answer:
$1,085.35
Explanation:
we can use the approximate yield to maturity formula to determine the market price of the bond if the interest rate falls to 7.57%
but first we need to calculate the coupon:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
0.077 = {coupon + [(1,000 - 1,077)/8]} / [(1,000 + 1,077)/2]
0.077 = {coupon - 9.625} / 1,038.50
0.077 x 1,038.50 = coupon - 9.625
79.9645 = coupon - 9.625
coupon = 79.9645 + 9.625 = $89.5895 ≈ $89.60
now we can calculate the new market price for the bond:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
0.0757 = {89.60 + [(1,000 - MV)/8]} /
0.0757 x [(1,000 + MV)/2] = 89.60 + [(1,000 - MV)/8]
0.0757 x (500 + 0.5MV) = 89.60 + 125 - 0.125MV
37.85 + 0.03785MV = 214.60 - 0.125MV
0.16285MV = 176.75
MV = 176.75 / 0.16285 = $1,085.35
A non-regulatory trading halt has been initiated on the NYSE due to an order imbalance. Which statement is TRUE
Answer: B. Other markets in the U.S. may still trade XYZ stock
Explanation:
A Non-regulatory trading halt is one that occurs due to a 7% drop in the S&P 500 Index. When this happens, all stock markets in the US are to halt trade.
This is very theoretical however because in reality, when this happens, traders can simply trade on other markets in the US including regional exchanges, Third Market Makers and Electronic Communication Networks.
What is the present value of a $1,200 payment made every year forever when interest rates are 4.5 percent
Answer:
26,666.67
Explanation:
A $1,200 payment is made forever
The interest rate is 4.5%
= 4.5/100
= 0.045
Therefore the present value can be calculated as follows
= 1,200/0.045
= 26,666.67
Hence the present value is 26,666.67