Answer:
A. Bond equivalent 10.82%
Effective annual yield to maturity of the bond 11.11%
B. Bond equivalent 10%
Effective annual yield to maturity of the bond 10.25%
C. Bond equivalent 9.49%
Effective annual yield to maturity of the bond 9.73%
Explanation:
A. Calculation to Find the bond equivalent
We would determine the yield to maturity on a semi-annual basis using Financial Calculator which is:
N = 10*2 = 30
PV = -940
PMT = [10%/2]*1000 = 50
FV = 1000
Press CPT, then I/Y, which gives us 5.41%
Bond equivalent yield to maturity=5.41% × 2
Bond equivalent yield to maturity= 10.82%
Calculation to determine the Effective Annual Yield To Maturity of the bond
Effective annual yield to maturity = (1+.0541)^2– 1
Effective annual yield to maturity = (1.0541)^2– 1
Effective annual yield to maturity =1.1111 – 1
Effective annual yield to maturity = 0.1111 *100
Effective annual yield to maturity = 11.11%
Therefore the bond equivalent and effective annual yield to maturity of the bond will be:
Bond equivalent 10.82%
Effective annual yield to maturity of the bond 11.11%
b. Calculation to determine the bond equivalent
Based on the information given the bond is selling at par which therefore means that the yield to maturity on a semi annual basis will be the same as the semi annual coupon 5%.
Bond equivalent yield to maturity =5%*2
Bond equivalent yield to maturity= 10%.
Calculation to determine Effective annual yield to maturity
Effective annual yield to maturity = (1+.05)^2– 1
Effective annual yield to maturity = (1.05)^2– 1
Effective annual yield to maturity=1.1025-1
Effective annual yield to maturity=.1025*100
Effective annual yield to maturity =10.25%
Therefore the bond equivalent and effective annual yield to maturity of the bond will be:
Bond equivalent 10%
Effective annual yield to maturity of the bond 10.25%
c.Calculation to determine the bond equivalent
N = 10*2 = 30
PV = -1,040
PMT = [10%/2]*1000 = 50
FV = 1000
Bond equivalent yield to maturity=9.49%, or 4.75% on a semi-annual basis.
Calculation to determine the Effective Annual Yield To Maturity of the bond
Effective annual yield to maturity = (1+.0475)^2– 1
Effective annual yield to maturity = (1.0475)^2– 1
Effective annual yield to maturity =1.0973– 1
Effective annual yield to maturity = 0.0973*100
Effective annual yield to maturity = 9.73%
Therefore the bond equivalent and effective annual yield to maturity of the bond will be:
Bond equivalent 9.49%
Effective annual yield to maturity of the bond 9.73%
What are the requirements for something to be used as money?
Revenue and expense data for Bluestem Company are as follows:
Year 2 Year 1
Administrative expenses $37,720 $20,300
Cost of goods sold 360,000 319,900
Income tax 41,000 32,200
Sales 820,000 700,000
Selling expenses 154,160 109,900
Required:
Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales.
Answer and Explanation:
The preparation of a comparitive income statement, with vertical analysis, stating each item for both years as a percent of sales is prepared below with the help of the attached spreadsheet:-
The formula that we have used is shown below:-
Gross profit percent = Gross profit / Sales revenue
Cost of goods sold percent = Cost of goods sold / Sales revenue
and in a similar way operating expenses items.
Ever since e-commerce started rising in prominence, the value of the retail showroom has diminished significantly. After all, consumers no longer need to visit a store to see what types of products are available for purchase. Not only does a quick search on Amazon accomplish this goal within seconds, but the site also provides helpful resources such as customer reviews and recommendations. Nevertheless, the online retail model doesn't work the same way for all products. Consumers on the whole still visit showrooms when they're looking to buy big expensive items like cars or mattresses.
Thanks to a new wave of startups, however, online retailers are beginning to break through these barriers of size and expense. While many consumers remain reluctant to purchase a car without driving it, online mattress sellers like Casper and Leesa Sleep are winning over thousands with a streamlined approach. Customers simply select the size they want, pay for it, and then wait for the mattress to arrive at their doorstep compressed into a single box. Most showrooms contain a variety of mattresses that can greatly fluctuate in price depending on what sales are happening at the moment. Customers then learn all these intricate details from assertive salespeople on the hunt for a commission.
Today's online mattress sellers cut out this rigmarole by using simplified inventory and fixed prices. But that doesn't necessarily mean these brands provide customers with the best deal possible. For instance, a king from Casper costs $950, not exactly a bargain for a foam mattress. In fact, customers could likely get a better deal if they were simply willing to do some haggling at a showroom. For Casper's customers, though, the company's appeal lies in its convenience rather than its value. There's also little risk in trying out a compressed mattress: Casper offers free shipping, 100-day guarantees and free returns on all of their products. While it remains to be seen if these upstarts can take on the $14 billion U.S. mattress industry, Casper's $100 million in sales during its first year of operation suggests that they're certainly on the right track.
Requried:
a. Intermediaries can be eliminated, but their activities cannot. Describe the activities provided by retail showrooms that manufacturers like Leesa and Casper are now providing. Specifically, what utility are the manufacturers providing?
b. Would you ever purchase a car or an expensive refrigerator direct from the manufacturer without seeing the product in person or testing the product? Explain why or why not. If not, what would you need from the manufacturer in order to purchase direct from them?
Explanation:
a. Formerly, these manufacturers have to provide storage space to display their inventory of mattresses, however, online retail sellers have taken up this activity by holding the various sizes of the available inventory, and then simply display them on photos/videos on their website.
b. No. The decision to purchase a car direct from the manufacturer without seeing the product in person or testing the product isn't the most preferred option for many, however, an expensive refrigerator could be purchased without seeing or testing it out. Usually, the following factors are considered:
Would this product match the description stated?Would the cost of return be worth it if there happens to be a problem with the product?Nontariff barriers are: _________
a. numerical limitations on the quantity of products that a country can import
b. rules, regulations, inspections, and paperwork which make it more costly or difficult to import products
c. taxes levied on the value of imported goods
d. all of the above
Answer:
The correct answer is the option D: All of the above. T
Explanation:
To begin with, the term known as "Non-Tariff Barriers" in the field of economics and business management refers to the barriers imposed by the government to the trade of imports and exports of goods and services in a country with the main difference that they use other mechanism rather than the commonly imposition of tariffs. Therefore that this tool can refer to rules, regulations or numerical limitations and many other impositions. That is why that it consists of any obstacle to international trade.
There are three equally-sized distinct subpopulations in Utopolis: unemployed, workers, and retirees. There are four possible social states which result in different utility levels for the three subpopulations:
Social State Unemployed Workers Retirees
A 12 50 10
B 20 20 20
C 15 15 15
D 1 40 1
a. Which social states might plausibly be chosen by the government of Utopolis? And Why?
b. There is a government election in Utopolis with two candidates: a Rawlsian and a Utilitarian candidate. Each candidate promises to enact one of the social states above. If the majority of citizens elect the candidate, which social state will be enacted?
Answer:
Utopolis
a. Social states chosen by the government of Utopolis are:
Social State Unemployed Workers Retirees
A 12 50 10
D 1 40 1
The reason for choosing these social states is that the social states of A and D reduce the headache felt by the government in managing unemployment and paying pensions to retirees, unlike the social states of B and C, which have equal numbers of the distinct subpopulations.
b. The enacted social state will be D. This is the social state preferred by the majority of citizens. There is a utopian economic condition achieved with social state D unlike with other social states.
Explanation:
a) Data and Calculations:
Utility levels in Utopolis:
Social State Unemployed Workers Retirees
A 12 50 10
B 20 20 20
C 15 15 15
D 1 40 1
Dennis sells short 100 shares of ARC stock at $152 per share on January 15, 2020. He buys 200 shares of ARC stock on April 1, 2020, at $190 per share. On May 2, 2020, he closes the short sale by delivering 100 of the shares purchased on April 1
a. What are the amount and nature of Dennis’s loss upon closing the short sale?
b. When does the holding period for the remaining 100 shares begin?
c. If Dennis sells (at $27 per share) the remaining 100 shares on January 20, 2017, what will be the nature of his gain or loss?
Answer: See explanation
Explanation:
a. What are the amount and nature of Dennis’s loss upon closing the short sale?
Sales consideration = $100 × $152 = $15200
Less: Closing Value of Short sales = 100 × $190 = $19000
Short term capital loss = $3800
b. When does the holding period for the remaining 100 shares begin?
The holding period for the remaining 100 shares begin on May 2, 2020, which was when the short sale was closed.
c. If Dennis sells (at $27 per share) the remaining 100 shares on January 20, 2017, what will be the nature of his gain or loss?
Sales consideration = 100 × $27 = $2700
Less: Base value = $19000
Short term capital loss = $16300
Kenji and Lucia are building their portfolios. Kenji purchases shares in a mutual fund and pays fees to a manager who actively manages the mutual fund's portfolio. He does so because he believes that the manager can identify inexpensive stocks that will rise in value. Lucia is not convinced. She buys shares in an index fund—a type of mutual fund that simply buys all of the stocks in a given stock index rather than actively managing a portfolio.
Kenji builds his portfolio on the supposition that:________
a. Stock analysts can use fundamental analysis to identify undervalued stocks.
b. Stock prices follow a random walk
c. The stock market exhibits informational efficiency.
Answer:
a. Stock analysts can use fundamental analysis to identify undervalued stocks.
Explanation:
Since in the question it is mentioned that he would trust the manager that it could identify the inexpensive stock that would increase the value but on the other side lucia not convinced, so she purchased the shares
So the kenji create his portfolio based on that the stock analyst would applied the fundamental analysis in order to analyze the undervalue of the stock
hence, the option a is correct
Kenji and Lucia are building their portfolios. Kenji purchases shares in a mutual fund and pays fees to a manager who actively manages the mutual fund's portfolio. He does so because he believes that the manager can identify inexpensive stocks that will rise in value. Lucia is not convinced. She buys shares in an index fund—a type of mutual fund that simply buys all of the stocks in a given stock index rather than actively managing a portfolio.
Kenji builds his portfolio on the supposition that:________
A. Stock analysts can use fundamental analysis to identify undervalued stocks.B. Stock prices follow a random walk
C. The stock market exhibits informational efficiency.
-KeonLee
I hope it help
#Carry on learning
The Aleander Company plans to issue $10,000,000 of 20-year bonds at par next June, with semiannual interest payments. The company's current cost of debt is 10 percent. However, the firm's financial manager is concerned that interest rates will increase in coming months, and has decided to take a short position in U. S. government t-bond futures. See the settlement data below for t-bond futures. (Note: One standard futures contract is $100,000).
a. Calculate the present value of the corporate bonds if rates increase by 2 percentage points.
b. Calculate the gain or loss on the corporate bond position.
c. Calculate the number of contracts required to cover the bond position. Then calculate the current value of the futures position.
d. Calculate the implied interest rate based on the current value of the futures position.
e. Interest rates increase as expected, by 2 percentage points. Calculate the present value of the futures position based on the rate calculated above plus the 2 points.
f. Calculate the gain or loss on the futures position.
g. Calculate the overall net gain or loss.
h. Is this problem an example of a perfect hedge or a cross hedge? Is it an example of speculation or hedging? Why?
Delivery Month Open High Low Settle Change Open Interest
(1) (2) (3) (4) (5) (6) (7)
Dec 103'14 103'14 102'11 102'17 -6 678,000
Mar 102'11 102'23 100'28 101'01 -5 135,855
June 101'14 101'26 100'02 100'12 -5 17,255
I have tried to explain it in extremely simple words and kept it precise too. I have made an excel file and compiled the answer in that clearly. All the parts are clearly mentioned. Please download the document and understand clearly. All the parts are solved independantly. Please find the attached file. Thanks.
The Varone Company makes a single product called a Hom. The company has the capacity to produce 40,000 Homs per year. Per unit costs to produce and sell one Hom at that activity level are: Direct materials $20 Direct labor $10 Variable manufacturing overhead $5 Fixed manufacturing overhead $7 Variable selling expense $8 Fixed selling expense $2 The regular selling price for one Hom is $60. A special order has been received at Varone from the Fairview Company to purchase 8,000 Homs next year at 15% off the regular selling price. If this special order were accepted, the variable selling expense would be reduced by 25%. However, Varone would have to purchase a specialized machine to engrave the Fairview name on each Hom in the special order. This machine would cost $10,800 and it would have no use after the special order was filled. The total fixed costs, both manufacturing and selling, are constant within the relevant range of 30,000 to 40,000 Homs per year. Assume direct labor is a variable cost. If Varone has an opportunity to sell 37,960 Homs next year through regular channels and the special order is accepted for 20% off the regular selling price, the effect on net operating income next year due to accepting this order would be:________
a. $33,320 decrease
b. $35,480 decrease
c. $33,320 increase
d. $35,480 increase
Answer:
$69,200 Increase
Explanation:
Calculation to determine what the effect on net operating income next year due to accepting this order would be:
Incremental revenue $408,000
(8,000 units × $51 per unit)
[$60 × (1 − 15%) = $51]
Less incremental costs:
Direct materials $160,000
(8,000 units × $20 per unit)
Direct labor $80,000
(8,000 unit × $10 per unit)
Variable manufacturing overhead $40,000
(8,000 units × $5per unit)
Variable selling expense $48,000
[$8 × (1 − 25%) = $6]
(8,000 units × $6 per unit)
Special machine $10,800
Total incremental cost $338,800
Incremental net operating income$69,200
($408,000-$338,800)
Therefore the effect on net operating income next year due to accepting this order would be:
$69,200 Increase
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2020 are presented below.
End of Year Beginning of Year
Cash and cash equivalents $750 $81
Accounts receivable (net) 2,060 1,810
Inventory 880 830
Other current assets 570 429
Total current assets $4,260 $3,150
Total current liabilities $2,060 $1,610
For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million.
Required:
Compute the current ratio, current cash debt coverage, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year.
Answer:
Nordstrom, Inc.
Current Ratio = Current assets/Current liabilities
= $4,260/ $2,060
= 2.1
Current cash debt coverage = Net Operating Cash/Current liabilities
= $1,251/$2,060
= 0.61
Accounts receivable turnover = Net Sales/Average Receivable
= $8,258/$1,935
= 4.27
Average collection period = 365/4.27
= 85.5 days
Inventory turnover = Cost of goods sold/Average inventory
= $5,328/$855
= 6.2 times
Days in inventory = 365/Inventory turnover
= 58.9 days
Explanation:
a) Data and Calculations:
End of Year Beginning of Year
Cash and cash equivalents $750 $81
Accounts receivable (net) 2,060 1,810
Inventory 880 830
Other current assets 570 429
Total current assets $4,260 $3,150
Total current liabilities $2,060 $1,610
Net credit sales = $8,258 million
Cost of goods sold = $5,328 million
Net operating cash = $1,251 million
Average receivables = $1,935 ($2,060 + $1,810)/2
Average inventory = $855 ($880 + $830)/2
The following data are taken from the financial statements of Bar Harbor Company:
2017 2016
Average accounts receivable $530,000 $550,000
Net sales on account 5,800,000 5,200,000
Terms for all sales are 2/10, n/30
a) Compute the accounts receivable for both years.
b) Compute the average collection period for both years.
Answer:
a. Accounts receivable turnover = Net sales on account/Average accounts receivable
2017
Accounts receivable turnover = $5,800,000/$530,000
Accounts receivable turnover = 10.94
2016
Accounts receivable turnover = $5,200,000 / $550,000
Accounts receivable turnover = 9.45
b. Average collection period = 365 days/Accounts receivable turnover
2017
Average collection period = 365/10.94
Average collection period = 33 days
2016
Average collection period = 365/9.45
Average collection period = 39 days