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tester [92]
2 years ago
15

Suppose you buy a 7 percent coupon, 20-year bond today when it’s first issued. If interest rates suddenly rise to 15 percent, wh

at happens to the value of your bond?
Business
1 answer:
Mariana [72]2 years ago
5 0

Answer: The value of the bond will decrease

Explanation:

The Interest rate has a negative inverse relationship with the value of a bond . When the interest rate increases the value of a bond decreases and when interest rate decreases  the bond value increases. Bonds with low coupon rates tend to be more sensitive to interest rate changes this is known has coupon effect.

Bonds with long time frame (long term bonds), they also  tend to be are more sensitive to changes in the interest rate this is known has the maturity effect.  Therefore a change in the interest rate will cause a huge change in the value of a Bond with low coupon rate and long time period.

The Bond is a 20 year Bonds which qualifies it to be a long term bond and the coupon Rate is 7%, with these facts and knowing that  long term bonds are more sensitive to interest rate changes we can conclude that the sudden increase of the interest rate to 15%  will cause a huge decrease in the value of the bond

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Consider two neighboring island countries called Felicidad and Arcadia. They each have 4 million labor hours available per week
iragen [17]

Answer:

Felicidad 80 million Jean

Arcadie    32 million Rye

Explanation:

To know which is the best in Rye production we haveto pick the one with the least opportunity cost (the country which producing Rye decreases less the production of Jeans)

Felicidad Rye opportunity cost 20/5 = 4  Jeans

Arcadia Rye opportunity cost  16/8 = 2 jeas

Arcadie will be the country with comparative advantage for Rye as it renounce to less units of Jeans than Felicidad

<em><u>The best country for jean production will be Felicidad</u></em>

4m x 20 = 80m jean

<em><u>The best country for Rye will be Arcadia</u></em>

4m x 8 = 32m Rye

8 0
2 years ago
Jarrod receives a scholarship of $28,000 from East State University to be used to pursue a bachelor's degree. He spends $16,800
Anton [14]

Answer:

$18,200

Explanation:

Calculation to determine what Jarrod may exclude from his gross income.

Using this formula

Gross income=Tuition+Books and supplies

Let plug in the formula

Gross income= $16,800 + $1,400

Gross income=$18,200

Therefore Jarrod may exclude $18,200 from his gross income.

8 0
2 years ago
Albert transfers land (basis of $140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock and a note
-Dominant- [34]

Answer:

1. Albert has a recognized gain on the transfer of $140,000.

Explanation:

Option D is wrong because Gold corporation has a basis in the land of Albert's recognized gain plus the cost of the value of land's Albert. Therefore, $140,000 + $140,000 = $280,000.

Option A is correct because, under the recognized gain clause 357(C), the mortgage on the land exceeds the cost of value of the land by $(200,000 - $140,000) = $60,000. Moreover, Alberta has received $80,000 additional from notes payable. So, total recognized gain on the transfer = $80,000 + $60,000 = $140,000.

5 0
2 years ago
a simplified alternative to capitalization of net income that does not take into account bad debts or expenses is called?
mestny [16]

<u>Answer:</u>

The correct answer for this is: Gross Rent Multiplier.

<u>Explanation:</u>

The type of a simplified alternative to capitalization of net income that does not take into account bad debts or expenses is called Gross Rent Multiplier (GMR).

Gross Rent Multiplier is used to find the approximate net incomes that does not include any bad debts or expenses.

Also, it is considered as the quickest tool to estimate the values, such as of a building.

6 0
2 years ago
Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a Commodities corporate officer, gives Brenda written
son4ous [18]

Answer:

Yes, the firm Commodities Exchange Corporation is liable to E-products Inc. as it has entered into a contract with Brenda who had written authority to buy on behalf of the firm.

Explanation:

Indeed, the risk of Commodities stretches out to E-Products. This is mostly a direct result of the risk of the chief is towards the operator for the agreement the specialist is the gathering in the interest of the head. Aside from this, there is an express power having a place with Brenda as she was given the approval from the head. Because of express, an evident position E-Products got the affirmation that Commodities is being spoken to by Brenda.

There is no close to home risk of Brenda to pay for the different fringe gadgets to the E-Products. Because of evident position, it was a reality clear to E-Products that Brenda is just going about as an operator for Commodities. As these items were purchased for the utilization of the head as opposed to the individual utilization of Brenda in this way she doesn't have any obligation.

4 0
2 years ago
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