A corporate bond with a 6.5 percent coupon has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5 percent. What will be the change in the bond's price in dollars and percentage terms

Answers

Answer 1

Answer:

Price change in dollars = $104.22

% decrease in price of dollars = 11.13%

Explanation:

We assume the corporate bond have a face value of $1,000

Face Value = $1000

Coupon = 6.5%*1000/2 =32.50

Number of Periods = 15*2 =30

Semi annual rate of BBB bond = 7.2%/2 =3.6%

Price of BBB Bond = PV of Coupons + PV of Par Value =

Price of BBB Bond = 32.50*(((1-(1+3.6%)^-30)/3.6%)+1000/(1+3.6%)^30

Price of BBB Bond = $936.43

Semiannual Discount Rate for BB bond = 8.5%/2 = 4.25%

Price of BB Bond = PV of Coupons + PV of Par Value

Price of BB Bond = 32.50*(((1-(1+4.25%)^-30)/4.25%)+1000/(1+4.25%)^30

Price of BB Bond= $832.21

Price change in dollars = $936.43 - $832.21

Price change in dollars = $104.22

% decrease in price of dollars = $104.22 / $936.43

% decrease in price of dollars = 0.111295025

% decrease in price of dollars = 11.13%

Answer 2

Price change in dollars is 104.22

And, in percentage it is 11.13%.

The calculation is as follows:

1. Face Value =1000

Coupon =6.5% ×1000 ÷ 2 =32.50

Number of Periods =15 × 2 =30

Semi annual rate of BBB bond =7.2% ÷ 2 =3.6%

Price of BBB Bond =PV of Coupons + PV of Par Value

=32.50 × (((1-(1+3.6%)^-30) ÷ 3.6%) + 1000/(1+3.6%)^30

=936.43

Now

Semiannual Discount Rate for BB bond =8.5% ÷2 =4.25%

Price of BB Bond =PV of Coupons + PV of Par Value

=32.50 × (((1-(1+4.25%)^-30) ÷ 4.25%)+1000 ÷ (1+4.25%)^30

=832.21

So,

Price change in dollars is

= 936.43 - 832.21

= 104.22

Now  

Percentage decrease in price of dollars is

= 104.22 ÷ 936.43

= 11.13%

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Related Questions

The impact of globalization on human resource planning

Answers

Answer:

The answer is below

Explanation:

The impact of globalization on human resource planning is both positive and negative depending on the point of view it is being looked upon.

Some of which are:

1. Globalization has led to firms and organizations to recruit from far and wide, across nations if needed.

2. It has reduced the cost of traveling and goods and services deliveries

3. It has led to increasing firms reducing the cost of maintaining staff as individual contractors have increased due to the opportunity of remote jobs caused by globalization.

4. The human resources planning has been impacted by globalization such that, many staff has been retrenched.

5. Globalization has also caused brain drain to developing nations in terms of human resource planning.

If there is a scarcity of supply in potatoes and many people want to buy, the prices is likely to be​

Answers

The price of potatoes will go up. Due to the fact of being low on the supply of potatoes. While tons of people wants to buy some potatoes. So if they want it bad enough, they will pay a more expensive price which results in the prices rising.

Pauley Company needs to determine a markup for a new product. Pauley expects to sell 25,000 units and wants target profit of $20 per unit. Additional information is as follows:
Variable product cost per unit 17
Variable administrative cost per unit 12
Total fixed overhead 23,500
Total fixed administrative 42,000
Using the variable cost method, what markup percentage to variable cost should be used?

Answers

Answer:

69 %

Explanation:

Mark up is Gross Profit expressed as a percentage of Total Costs.

When using variable costing, only the variable costs are used to determine the Product Cost.

Product Cost = Variable product cost per unit + Variable administrative cost per unit

                      = $17.00 + $12.00

                      = $29.00

Therefore,

Mark up = Profit ÷ Total Variable Cost

              = $20.00 ÷ $29.00

              = 0.69 or 69 %

Which of the following people would likely be issued an order for specific performance or an injunction, rather than a monetary award?
a.) Franco hires a builder to build his new house. After a year of construction, Franco moves in and discovers that the workmanship is subpar and many parts of the house violate the building code. Franco sues the builder for breach of contract.
b.) Alicia, an artist, has a signed contract with one of her patrons that promises them the right of first refusal for any sculpture she completes. When she finishes her latest sculpture, she wants to sell it to another friend for $75,000 instead. The patron sues Alicia for breach of contract.
c.) Teagan owns an appliance store, and he decides to bend his usual store policy by allowing Pierce to buy a new refrigerator with a personal check. When the check bounces and Pierce refuses to pay with cash, Teagan sues Pierce for breach of contract.
d.) Julie buys a used laptop from a local computer repair shop for $350. When she gets the computer home, she discovers it doesn't work. The shop refuses to repair the computer or refund her money, so Julie sues the shop for breach of contract.

Answers

Answer: b. Alicia, an artist, has a signed contract with one of her patrons that promises them the right of first refusal for any sculpture she completes. When she finishes her latest sculpture, she wants to sell it to another friend for $75,000 instead. The patron sues Alicia for breach of contract.

Explanation:

An injunction is a judicial order whereby an individual is restrained from either starting or continuing a particular action whereby the legal right of an economic entity is being threatened. In such case, the person involved must do what is expected of him or her.

In the scenario in the question, the person that is likely be issued an order for specific performance or an injunction, rather than a monetary award is Alicia, an artist, has a signed contract with one of her patrons that promises them the right of first refusal for any sculpture she completes. When she finishes her latest sculpture, she wants to sell it to another friend for $75,000 instead. The patron sues Alicia for breach of contract.

Which of the following is not an attribute of a Limited Partnership?

The limited partner is authorized to make business decisions on behalf of the general partners.
Limited partnerships do not share in the risk of the company beyond the amount of their investment.
Limited Partners cannot sell their interest in the business without notifying the general partners.
Limited Partners are paid a dividend on profits earned by the company.

Answers

Answer:

The limited partner is authorized to make business decisions on behalf of the general partners.

Explanation:

A limited partner also knows a silent partner. The limited partner enjoys limited liability to the debts of the business. They are called silent partners because they do not participate in running the business affairs. A limited partner contributes capital to the partnerships and allows the general partner to manage the business affairs.

Since a limited partner enjoys limited liabilities to the partnership's debts, they are not allowed to make business decisions. The general partners with unlimited liabilities run the business and make all the decisions.

For a present sum of $840,000, determine the annual worth (in then-current dollars) in years 1 through 6 if the market interest rate is 10% per year and the inflation rate is 3% per year. The annual worth is:________ $ .

Answers

Answer:

The annual worth is:________

$667,380

Explanation:

Present value of investment  = $840,000

Number of years = 6

Market interest rate = 10%

Inflation rate = 3%

Real interest rate = 7%

PV Annuity factor = 4.767

Total FV of annuity = $840,000 * 4.767 = $4,004,280

Annual worth = $4,004,280/6 - $667,380

The annual worth of the investment of $840,000 will be $667,380 based on the market-adjusted interest rate of 7% (10 - 3).

The following graph shows the consumer price index (CPI) for a fictional country from 1980 to 1990. Consumer Price Index (CPI) 60 1980 1982 1984 1986 1988 1990 During which of these time periods was there a period of inflation?​

A. 1986 to 1988
B. 1988 to 1990
C. 1982 to 1984
D. 1980 to 1982

The answer is C

Answers

C. 1982 to 1984 even though you already answered the question

Answer:

C. 1982 to 1984 is correct answer

Ken just purchased new furniture for his house at a cost of $16,700. The loan calls for weekly payments for the next 6 years at an annual interest rate of 11.17 percent. How much are his weekly payments

Answers

Answer: $73.51

Explanation:

No. of periods = 6 * 52 weeks = 312 weeks

Weekly Interest rate = 11.17%/52 = 0.2148%

Weekly Payment = Cost * (rate / ( 1 - ( 1 + r ) ^ -n))

= 16,700 * (0.2148% / (1 - (1 + 0.2148%)⁻³¹²))

= $73.51

If you observe suspicious activity relating to a client's application for a financial product, you must notify your Team Leader, District General Manager, or Franchisee immediately.
a. True
b. False

Answers

Answer:

True

Explanation:

In simple words, every individual working in the fiance industry have a moral obligation and rules to follow. Under these obligations the individuals have some duties to clients as per which if the worker see something inappropriate regarding the activity of their client, he or she should first report to their immediate supervisor or take outside suggestion before going to the authorities.

Hence the given statement is true.

Dani's just paid an annual dividend of $6 per share. What is the dividend expected to be in five years if the growth rate is 4.2%

Answers

Answer:

the dividend expected in five years is $7.37

Explanation:

The computation of the dividend expected in five years is as follows;

As we know that

Future value = Present value × (1 + rate of interest)^time period

Dividend at year 5 = $6 × (1.042)^5

= $6 × 1.228396569

= $7.37

Hence, the dividend expected in five years is $7.37

The same is to be considered

If public goods were marketed like private goods, then public goods would be overproduced:__________

Answers

Answer:

in the presence of suce positive externalities

Explanation:

because the cost of production for the firm are overstated and the profits are understated

A business owner makes 50 items a day. She spends 8 hours in producing those items. If hired elsewhere she could have earned $10 an hour. The item sells for $10 each. Production occurs seven days a week. If the explicit costs total $10,000 a month the economic profit for the month equals:

Answers

Answer:

$2,600

Explanation:

The computation of economic profit is shown below:

Economic profit = Revenues - Economic cost

where,

Economic cost = Explicit cost + Implicit (opportunity) cost

where,

Implicit cost

= $10 × 8 hours × 30 days

= $2400

And,

Explicit cost for a month = $10,000

So,

Economic cost is

= $10,000 + $2400

= $12,400

Now

The Revenue

= Price × quantity

= $10 × 50 items × 30 days

= $15,000

Finally

Economic profit is

= $15,000 - $12,400

= $2,600

In 1926, Nedda McGrath became the first female
O copywriter
O art director
O editor
O graphic designer

Answers

Answer:

art director

Explanation:

ART DIRECTOR

Which of the following has made communication within teams more dificult in recent years?
O advancements in technology
O an increasingly global society
O a cuture of disrespect
O declining professionalism

Answers

Answer:

an increasingly global society

Explanation:

An increasingly global society or globalization has led to increased interactions between people from different countries. Improvements in transport networks have made it easy for goods, people, and technology to move across borders. Globalization has made economies depend on each other, which has necessitated relaxation on border restrictions.

Due to globalization, it is common to find people from different nationalities living and working in a country. Consequently, organizations have teams composed of people from different regions.  Diversity in the workplace has meant the inclusion of different backgrounds in the workforce. As a result, communications have become more challenging due to language barriers and differences in cultural beliefs and practices.

If your co-worker sends you $30 each week via Cash App for lunch and you transfer it to your bank account instantly (1.5% fee), how much are you being charged in fees for the year?

Answers

Answer:

$23.4

Explanation:

Each week, the co-worker sends $30, the feed for transfers is 1.5%. The charges per week are

=1.5 % of $30

=1.5% x $30

=0.015 x $30

=$0.45

One year has 52 week, The charge per year will be

=$0.45 x 52

=$23.4

Last year Ellen received $75,000 in compensation from her employer who also agreed to pay her Social Security taxes of $4,650 and Medicare taxes of $1,088 without deducting them from her wages. Based solely on these facts, what amount must Ellen include in her income

Answers

Answer:

Ellen's AGI = $80,738

Explanation:

Since Ellen's employer paid for her share of FICA taxes, we could consider them as taxable fringe benefits. As such, they must be included in Ellen's AGI for the current in order to determine her total taxable income = salary + social security taxes + medicare taxes = $75,000 + $4,650 + $1,088 = $80,738

The amount Ellen must include in her income is $80,738.

Data and Calculations:

Annual employment compensation = $75,000

Social security taxes paid by employer = $4,650

Medicare taxes paid by employer = $1,088

Thus, the amount Ellen must include in her income is $80,738 ($75,000 + $4,650 + $1,088).

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What are the two types of agencies and where do they receive their power and duties? a. International agencies receive their power directly from the president and Congress. Domestic agencies also receive delegated power and authority from the president and Congress. b. Executive agencies receive their power delegated from the executive branch (the president). Independent agencies receive their power as delegated from Congress. c. Economic agencies receive their power as delegated from the president and Congress. Independent agencies also receive their power as delegated from the president and Congress.

Answers

Answer: b. Executive agencies receive their power delegated from the executive branch (the president). Independent agencies receive their power as delegated from Congress.

Explanation:

There are two types of Administrative agencies in the United States: Executive and Independent.

Executive agencies are created by the Presidency and are therefore answerable to the president. They usually have a single leader who sits on the President's cabinet.

Independent agencies are created by an Act of Congress to manage complex areas of operation. They do not usually have a single leader but rather a board or commission with leaders that do not sit on the President's cabinet. An example is the Environmental Protection Agency(EPA).

When the domestic currency is strong or expected to become strong, eroding the competitive position of the firm, it can choose to locate production facilities in a foreign country where costs are low due to either the undervalued currency or underpriced factors of production. This is a strategy related to what type of foreign currency exposure?A. Operating exposure.B. Translation exposure.C. Transaction exposure.D. Asset exposure.

Answers

Answer:

A. Operating exposure

Explanation:

The Operating exposure may be defined as the extent to which any particular company is exposed to the inflation risk and exchange risk. It is the exposure to the risk occurred in the exchange rate which may impact the revenue of the company.

It refers to he future cash flow of the firm or the company that gets affected because of the change in the exchange rate of the currencies.

It measures the change in the current value of the company that results from the unexpected changes in the currency exchange rates.

In the context, when a company opens up a production facility in a country where the costs are low and the currency of the parent country or the host country is expected to be strong, it is known as the Operating exposure strategy of the company to the increase the cash flow.

Jubilee's Bakery is budgeting cash for 2017. The cash balance at December 31, 2016, was $6,000. Jubilee's Bakery budgets 2017 cash receipts at $81,000. Estimated cash payments include $44,000 for inventory, $34,000 for operating expenses, and $15,000 to expand the store. Jubilee's Bakery needs a minimum cash balance of $13,000 at all times. Jubilee's Bakery expects to earn net income of $76,000 during 2017. What is the final result of the company's cash budget for 2017?
A. Must arrange new financing for $19,000
B. There is $19,000 available for additional investments.
C. Pay off $38,000 of debt.
D. There is $38,000 available for additional investments.

Answers

Answer: B. There is $19,000 available for additional investments.

Explanation:

Cash Receipts both Estimated and available

= Beginning balance + budget receipts

= 6,000 + 81,000

= $87,000

Cash payments

= 44,000 + 34,000 + 15,000

= $93,000

Additional financing required = Cash receipts - Cash payment - minimum cash balance

= 87,000 - 93,000 - 13,000

= -$19,000

Consider the four-step process that many companies follow to estimate the market demand curve for their product. Place the steps in order, with the first step in the highest position and the last step in the lowest position.a. survey customersb. plot the demand curvec. scale up the quantities demanded by the survey respondentsd. add up the total quantity demanded by the customers at each price point

Answers

Answer:

The four-step process that many companies follow to estimate the market demand curve for their products are:

a. survey customers

d. add up the total quantity demanded by the customers at each price

c. scale up the quantities demanded by the survey respondents

b. plot the demand curve

Explanation:

The above steps enable the companies to estimate the market demand for their products.  They also segment the demand to ascertain the segments that will perform better than others.  The behavior of consumers is modeled during the estimation to verify how the price of the product, consumer income, or any other variables will impact the market demand.

Louise purchased her primary residence for $240,000. As part of the closing procedure, she paid $2,300 in a loan origination fee, $750 to a lawyer to review the purchase contract and other closing papers, $150 for a property survey, and $800 for title insurance. She also gave the real estate agent a $75 gift basket in appreciation for his hard work. What is Louise's basis in the residence

Answers

Answer:

$241,700

Explanation:

Luoise's basis in her house = purchase price + any costs associated and necessary to complete the purchase process = $240,000 (price of the house) + $750 (lawyer's fees) + $150 (property survey) + $800 (title insurance) = $241,700

In order to determine a house's basis, you must assume that you are purchasing the house using cash, no fees directly related to a mortgage are included, nor gifts to real estate agents.

According to modern growth theory, the key to economic growth is Group of answer choices a large pool of unskilled labor. skilled labor. institutions. paved roads. modern buildings.

Answers

Answer:

Skilled labor

Explanation:

As per the modern economic growth theory, the economic growth would be possible via expenditure done on research & development and have the knowledge regarding innovations so for this the skilled labor is required that helps in research & development and so for innovations

So as per the given statement, the skilled labor is the correct option

Hence, the same is to be considered

Research the challenges associated with payments across international borders and prepare a brief summary of your findings. Do most e-commerce companies conduct business internationally

Answers

Answer:

The main challenge associated with payments across international borders is the challenge of currency rates. Because currencies vary across countries, sometimes a payment can be either hugely benefitial or hugely detrimental for a company, depending on how expensive or cheap its domestic currency is compared to the foreign currency.

Another challenge is related to international legislation, banking systems, red tape, and so on. Banking laws in some countries are more favorable to firms than in others, for example, by charging less financial expenses or comissions.

Social responsibility is know as ______.
A. profit and planet
B. people and community
C. none of the options are correct
D.people and profit

Answers

Answer:

B. people and community

Explanation:

Social responsibility is known as people and community. In other words it refers to any and all responsibilities that you may have when being part of a community or society to make that community better. This involves a wide range of responsibilities or obligations such as volunteering, cooperating with others, ethical and moral choices, etc. Anything that benefits the larger structure that you are part of would be considered a social responsibility.

The term that can be used to describe Social responsibility isB:people and community

Social responsibility  can be regarded as ethical framework as well as suggests, which explains that there are different obligation for individual so they can  work and cooperate with other.

It involves different individuals and the community as a whole and all organizations.

Therefore, option B is correct.

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Marigold Corp. constructed a building at a cost of $13600000. Weighted-average accumulated expenditures were $5700000, actual interest was $560000, and avoidable interest was $280000. If the salvage value is $1110000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is $326250. $319250. $347000. $461750.

Answers

Answer:

$121,750

Explanation:

Cost of the building = 13600000

Average accumulated expenses = 5700000

Actual interest = 560000

Avoidable interest = 280000

Salvage value = 1110000

Life in years = 40 years

Depreciation expenses for 1st full year = {(Average accumulated expenses + Avoidable interest) - Salvage value} / Life in years

Depreciation expenses for 1st full year = (5700000 + 280000 - 1110000) / 40

Depreciation expenses for 1st full year = 4870000 / 40 years

Depreciation expenses for 1st full year = $121,750

Using the following information, compute the cost of direct materials used. Raw materials inventory, January 1$ 25000 Raw materials inventory, December 3155000 Work in process, January 127000 Work in process, December 3118000 Finished goods, January 160000 Finished goods, December 3148000 Raw materials purchases2000000 Direct labor890000 Factory utilities225000 Indirect labor75000 Factory depreciation500000 Operating expenses630000

Answers

Answer:

The cost of direct materials used is $1,970,000.

Explanation:

The cost of direct materials used can be computed using the following equation:

Cost of direct materials used = Raw materials inventory, January 1 + Raw materials purchases - Raw materials inventory, December 31 ............ (1)

Where;

Raw materials inventory, January 1 = $25000

Raw materials inventory, December 31 = $55000

Raw materials purchases = $2000000

Substituting the values into equation (1), we have:

Cost of direct materials used = $25000 + $2000000 - $55000 = $1,970,000

Therefore, the cost of direct materials used is $1,970,000.

In 2020, Monty Corporation had net cash provided by operating activities of $486,000, net cash used by investing activities of $976,000, and net cash provided by financing activities of $627,000. At January 1, 2020, the cash balance was $348,000. Compute December 31, 2020, cash. Cash, December 31, 2020

Answers

Answer:

Monty Corporation

Computation of Cash at December 31, 2020:

$485,000.

Explanation:

a) Data and Calculations:

Net cash provided by operating activities = $486,000

Net cash used by investing activities =         (976,000)

Net cash provided by financing activities = $627,000

Net cash inflow =                                           $ 137,000

January 1, 2020 Cash balance                       348,000

December 31, 2020 Cash balance              $485,000

b) The above implies that Monty made more (cash inflow) cash of $137,000 between January 1, 2020 and December 31, 2020.  This is added to the January 1, 2020 cash balance to arrive at the December 31, 2020 cash balance.

How many jobs do retail sales support in the United States?
O 4 million
O 24 million
O 42 million
O 240 million

Answers

Answer:

Hey mate here's your answer ⤵️

42 million jobs

The retail sector continues to grow. Total retail sales (including motor vehicle and parts sealers) from 1 million retail establishments in the United States surpassed $5 trillion in 2017. The U.S. retail industry directly employs about 29 million people and supports more than 42 million jobs.

Hope it was helpfulll

The retail sales sector support 42 million jobs in the United States. Thus, the correct answer is option C.

What is retail sales?

Retail sales are the sales of consumer goods, or final goods, by businesses to end users, and include both in-store and online sales. Products can be either durable (with a long expected shelf life) or perishable (such as groceries). Consumer goods include things like food, clothing, and furniture.

The retail industry is expanding. Total retail sales (including motor vehicle and parts sealers) from the United States 1 million retail establishments surpassed $5 trillion in 2017. The retail industry in the United States directly employs approximately 29 million people and supports over 42 million jobs.

Therefore, option C is correct.

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A new venture will require an initial investment in fixed assets of $20,000 and in working capital of $10,000. The fixed assets will have no salvage value at the end of the project's four-year life, and the working capital will be completely recovered at the end of the project. The organization's cost of capital is 16%. At a time value of money of 16%, the present value of an ordinary annuity of $1/year for four years is 2.8 and the present value of $1 at the end of four years is 0.6. What is the annual net cash inflow required for the project to break even on a time-adjusted basis

Answers

Answer:

$5,000

Explanation:

we need to determine the annual cash flows in order that NPV = $0

initial outlay = present value of future cash flows

$20,000 = (FCF x 2.8) + ($10,000 x 0.6)

$20,000 = 2.8FCF + $6,000

$14,000 = 2.8FCF

FCF = $14,000 / 2.8 = $5,000

Bellue Inc. manufactures a single product. Variable costing net operating income was $111,700 last year and its inventory decreased by 3,000 units. Fixed manufacturing overhead cost was $2 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year

Answers

Answer:

$105, 700

Explanation:

The cause of the difference between the Variable Costing Net Operating Income and Absorption Costing Net Operating Income is because of fixed costs absorbed in inventory using the absorption costing method.

We need to reconcile the Variable Costing Net Operating Income to Absorption Costing Net Operating Income.

Reconciling the Variable Costing Net Operating Income to Absorption Costing Net Operating Income

Variable costing net operating income                    $111,700

Fixed costs in Inventory decrease (3,000 × $2)      ($6,000)

Absorption Costing Net Operating Income            $105,700

Conclusion :

The absorption costing net operating income last year was $105, 700

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