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Ksju [112]
2 years ago
7

uppose the current term structure of interest rates, assuming annual compounding, is as follows: s_1s 1 ​ s_2s 2 ​ s_3s 3 ​ s_4s

4 ​ s_5s 5 ​ s_6s 6 ​ 7.0% 7.3% 7.7% 8.1% 8.4% 8.8% What is the discount rate d(0,4)d(0,4)? (Recall that interest rates are always quoted on an annual basis unless stated otherwise.)
Business
1 answer:
Ahat [919]2 years ago
5 0

Answer:

7.53%

Explanation:

Calculation for the discount rate of d(0,4)d(0,4)

The discount factor is : d=1/1+i

And given that the interest rates are compounded annually the discount factor will gives the present value of the bond when provided with the interest rate and maturity value.

Therefore the present value of a bond with a maturity value of 1 will be;

Present value=1 /(1+i1) (1+i) (1+i3) (1+i4)

Present value=1 / (1.07) (1.073) (1.077) (1.081)

Present value=0.748

The present value of a bond with a maturity value of 1 will therefore be 0.748.

Now, let calculate the discounting factor for the whole 4 years:

1 (1+d (0,4))‐⁴ =0.748

(1+d(0,4))=0.748‐¹/⁴

1+d (0,4) =1.0753

d (0,4)=0.0753

Therefore the discount rate will be 7.53%

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Maria Mendez is division controller and James Dalton is division manager of the Hestor Shoe Company. Mendez has line responsibil
myrzilka [38]

A) Mendez's ethical responsibilities are,

1)Competence

2)Confidentiality

3)Integrity

4)Credibility

B)The responsibilities of mendez if dalton gives her a direct order to book the sales are explained below.

Explanation:

1)

Integrity

Cometence

Credibility

IMA is highly regarded organization for accountants and finance professionals. The following four standard to which the organization holds CMA's accountable are

1)Competence

2)Confidentiality

3)Integrity

4)Credibility

2)

Mendez should refuse to follow dalton's orders and if dalton persists, the incident should be reported to the corporate controller of hester shoe company. Support for the linc managers should be wholehearted, but it should not require unethical conduct.

8 0
2 years ago
Match the scenarios to the type of income earned based on the categories of the income approach.
Dmitry [639]

Answer:

1. Compensation of employees

Mos Quito works as an exterminator for Bugs B Dead, Inc

2. Corporate Profits

Noah Count,Inc ., recently paid out dividends to stakeholders.

3. Proprietor's income

Exterminator plus is an owner owned business.

4. Miscellaneous Adjustments

Noah Count Inc collects $2000 in sales taxes every month

5. Net Interest

Bugs B Dead, Inc., pays it's mortgage promptly every month

6. Rental income

Anitha house bought a duplex for a additional income

Explanation:

1) Compensation of employees is the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the employee during an accounting period. In this case Mos Quito is an employee.

2) Corporate profits also called net profit is a measure of financial performance that indicates earnings after expenses and other deductions made.

3) Proprietor's income is the excess of revenue over explicit production cost of owner-operated businesses and includes payments for labor, capital, land and entrepreneurship.

4) Miscellaneous Adjustments is used to make adjustments without having to consider amount limitations.

5) Net interest is the difference between the income a bank earns from interest and the expenses (including interest payments) associated with its liabilities.

6) Rental income is the amount of money collected by a landlord from tenants using a particular space or property

8 0
2 years ago
Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 6 percent and i
vampirchik [111]

Answer:

1. Total of amortisation for 3 years = 16+17+19 = 52

Bonds issue price = 1000 - 52 = $948

2.

Bond is sold at discount.

Amount of discount = Amount of amortisation over 3 years

= $52

3.

Amount to be shown in balancesheet will be inclusive of the amortisation charge for the year

Bonds payable at the end of Year 1 = 948 + 16 = 964

Bonds payable at the end of Year 2 = 964 + 17 = 981

4.

a,

$60 is the amount of interest paid per annum. This is calulated on the facevalue of bond

$1,000x x6% = %60

b,

$77 is the interest expense for Year 2.

This is sum of Interest paid and Amortisation charge for the year

= 60 + 17 =77

c,

$17 is the amortization expence for Year 2

Opening balance of Bonds payable for Year 2 = $964

Market rate of interest = 8%

Interest charge for Year 2 = $77

Cash paid as interest = $60

Hence amortisaton charge for Year 2 = Interest expense - Interest paid = $77 - $60 = $17

d,

$981 is the balnce of balance of bonds payble after Year 2

Balance for Year 2 = Opening balance payable + Amortisation expence for the Year (arived from Step 4c above) = $964 + $17

= $981

8 0
2 years ago
Sean is spending the day at the water park. He paid to enter the park and can use any water ride an unlimited number of times th
aksik [14]

Answer: a. less than 50 utils.

b. Sean's marginal utility has become negative.

c. fewer times

Explanation:

Utility is the satisfaction derived from consuming a good or service. Marginal Utility is the added satisfaction a consumer gets when he/she consumes an additional unit while the total utility is the sum of how satisfied he/she is after consuming a given number of units.

Marginal utility reduces with every extra unit taken. So Sean's marginal utility of riding the Twisty River the second time is likely less than that of the first time.  Consider when you are very thirsty and you take the first sip of water. This is the most satisfying sip and the last one you take is the least satisfying.

As long as marginal utility is positive, total utility will increase. Imagine Sean gets a marginal utility of 50, 40, 30 and 10. The total utility is then 50, 90, 120 and 130 after every ride. If after the fifth ride, his total utility is 115, it means his marginal utility has become negative (maybe he threw up).

Because marginal utility reduces with every additional unit taken, Sean is not likely to keep spending the same amount of money when he is not getting the same amount of satisfaction so he will likely ride the Twisty River  fewer times.

6 0
2 years ago
Alicia is conducting a study on consumer behavior. The study requires her to note the number of people who shop at a particular
Paul [167]

Answer:

the correct answer is YES ignore her above answer

Explanation:

4 0
2 years ago
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