Find the duration of a 6% coupon bond making annual coupon payments if it has four years to maturity and a yield to maturity of 5%. (assuming a face value of $1,000)

Answers

Answer 1
Answer:

Answer:

3.703716

Explanation:

The duration can be calculated by dividing the present value of cash flow over time by the present value of cashflow.

Time             Cash flow         PV of CF              PV of CF X t  

1                        60                   $59.41                     $59.41  

2                       60                   $58.82                    $117.64  

3                       60                   $58.24                    $174.71

4                     1060                 $1,018.64                 $4,074.56  

Total                                        $1,195.10                  $4,426.30  

Duration = 4426.30/1195.1

Duration = 3.703716


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Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be invested in government bonds earning 3 percent, then how much money should Jan's hold?

Answers

Answer: $6000

Explanation:

If holding is $10000,

Reduction in cash holding = (10000-10000) = 0  

Interest earned in government bonds=(Reduction in holdings) × 0.03 =0

Cost of deposits = 0

Additional benefit = (interest earned - cost of deposit)

Additional benefit = 0-0 = 0

Making a mid day deposit;

Reduction in cash holding = (10000-8000) = $2000

Interest earned in government bonds = Reduction in holdings × 0.03

= 2000 × 0.03 =$60

Cost of deposits=$80

Additional benefit=$60-80=-$20

Using a armored car service;

Reduction in cash holding=(10000-6000)=4000

Interest earned in government bonds= 4000 × 0.03 = $120

Cost of deposits=$120

Additional benefit=120 - 120= $0

Using computerized cash management service;

Reduction in cash holding=(10000-4000)=6000

Interest earned in government bonds;

6000 × 0.03 = $180

Cost of deposits=$180

Additional benefit=180 - 180=$0

Additional benefit is maximized in case of both computerized management service and armor vehicle . So, Optimal cash holding is $6000

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Answers

Answer:

4

Explanation:

The calculation of the process capability index is given below

Data provided in the question according to the question is as follows

USL = 27

LSL = 21

Now we take the average

X = (21 +27) ÷ 2

= 24

The standard deviation is 0.25

= min(USL - mean ÷ 3 × standard deviation , mean - LSL ÷ 3 × standard deviation)

After solving this the process capability index is 4

john Hayes and Lynn Magosian, auditors for a public accounting firm, went to lunch at the Bay View Restaurant in San Francisco. John left his raincoat with a coatroom attendant, but Lynn took her new raincoat with her to the dining room, where she hung it on a coat hook near her booth. When leaving the restaurant, Lynn discovered that someone had taken her raincoat. When John sought to claim his raincoat at the coatroom, it could not be found. The attendant advised that it might have been taken while he was on his break. John and Lynn sued the restaurant, claiming that the restaurant was a bailee of the raincoats and had a duty to return them. Are both John and Lynn correct

Answers

Answer:

John is correct but Lynn isn't

Explanation:

John is correct because he left his coat with the coatroom attendant under the premise that it would be properly looked after and returned to him when he was done having lunch at the restaurant. However, Lynn just left her coat lying around under no ones care or supervision, there wasn't a predetermined agreement that anyone would be responsible for watching it on her behalf, therefore I don't think she is has the right to sue.

You are buying and reselling items found at your local thrift shop. You found an antique pitcher for sale. If you need a 22% markup on cost and know most people will not pay more than $17 for it, what is the most you can pay for the pitcher?

Answers

Answer:

The maximum amount that could be paid for the antique pitcher is $13.93 as shown by the workings in the explanation section below.

Explanation:

Since the maximum price that could be charged for the antique pitcher is $17,the most that could be paid in purchasing it, is given by the below formula:

selling price * 100% / (100% + Markup%)

=$17*100%/(100%+22%)

=$13.93

From the foregoing analysis,the markup in dollar terms is $17-$13.93=$3.07 which represents 22% of the cost price of the antique pitcher.

Will Presley sells management training classes to entrepreneurs and Fortune 1000 companies.Last quarter his sales were very disappointing.When asked,he admitted that his poor performance was directly related to his wife having a new baby.He had not the time to devote to sales that he should have.As a result of Will's poor performance in the last quarter,which of the following is likely to occur? A) His expectancy estimates will be higher and his instrumentality estimate will remain the same
B) His instrumentality estimates will be lower and his expectancy estimates will remain the same
C) His expectancy estimates for the next quarter will be lower
D) Neither her expectancy nor instrumentality estimates will change
E) His expectancy estimates for the next quarter will be higher

Answers

Answer:

Option E

His expectancy estimates for the next quarter will be higher

Explanation:

Will Presley's expectancy rate will be higher in the next sales quarter. This is because he feels that the birth of his new baby is instrumental to his his poor sales performance. Now that he feels that factor has been taken out of the way, he expects that there will be a great increase in the next sales quarter.

In a press conference, the president of a small country displays a chart showing that GDP has risen by 10 percent every year for five years. He argues that this growth shows the brilliance of his economic policy. However, his chart uses nominal GDP numbers. This chart might be wrong because it: is rare for GDP to increase by the same amount for five years. only uses five years of information. relies on nominal GDP which might have increased because of price increases and not output increases. relies on nominal GDP which might have increased because of output increases and not price increases. If you were a reporter at the press conference, to get a more accurate picture of the country’s economic growth you should ask for the: unemployment rate which reflects changes in international flows. growth rate of real GDP which excludes price changes. growth rate of real GDP which includes price changes. inflation rate which includes price change.

Answers

Answer:

a) the correct answer is "B"

b) the correct answer is "C"

Explanation:

a) the correct answer is "B"

relies on nominal GDP which might have increased because of price increases and not output increases. As nominal GDP accounts for the price and it is calculated at the current price level. The answer is "B".

b) the correct answer is "C"

We can ask for growth rate of real GDP which excludes price change.

 

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