Six years ago the Templeton Company issued 21-year bonds with a 14% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Templeton called the bonds.

Required:
a. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.

b. Why the investor should or should not be happy that Templeton called them.

I. Since the bonds have been called, interest rates must have risen sufficiently such that the YTC is greater than the YTM. If investors wish to reinvest their interest receipts, they can now do so at higher interest rates.
II. Since the bonds have been called, interest rates must have risen sufficiently such that the YTC is greater than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower interest rates.
III. Since the bonds have been called, investors will receive a call premium and can declare a capital gain on their tax returns.
IV. Since the bonds have been called, investors will no longer need to consider reinvestment rate risk.
V. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC is less than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower interest rates.

Answers

Answer 1

Answer:

a. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.

HPR = [(ending price - actual price) + dividends received] / actual price

HPR = [($1,090 - $1,000) + (6 x $140)] / $1,000 = $930 / $1,000 = 93%

b. Why the investor should or should not be happy that Templeton called them.

V. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC is less than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower interest rates.

The investor should be unhappy because the market interest rates were much lower than 14%. A company will repurchase bonds only if the market rates are much lower than the current coupon rates that they are paying. Even after paying the call premium, the company is still saving money.

On the other hand, if the investor wants to reinvest the $1,090 received per bond, they will earn a lower interest rate.


Related Questions

I'm 15 now. I _ (be) 16 next year​

Answers

Answer:

good for u

Explanation:

Assume there are two countries (France and the United States) and two goods (Wine and Cheese). In France, labor productivity in Wine is 40 bottles per hour and 30 kilos per hour in Cheese. In the US, labor productivity in Wine is 12 bottles per hour and 12 kilos per hour in Cheese. Given this information, which country has the comparative advantage in Cheese

Answers

Answer:

United States

Explanation:

A comparative advantage results when a country's opportunity cost of producing good X is lower than the opportunity cost of producing good X in another country.

France

Opportunity cost of producing wine = 30/40 = 0.75 kilos of cheese

Opportunity cost of producing cheese = 40/30 = 1.33 bottles of wine

United States

Opportunity cost of producing wine = 12/12 = 1 kilo of cheese

Opportunity cost of producing cheese = 12/12 = 1 bottle of wine

France has a comparative advantage in the production of wine, and the US has a comparative advantage in the production of cheese.

Which of the following should the closing paragraph not do?

Answers

Answer:

3

Explanation:

Answer: B - Describe why are you interested in the company

Explanation: that’s the correct answer !!!

______ is a chemical that captures energy for photosynthesis.
A. glucose
B. lactic acid
C. carbon dioxide
D. chlorophyll

Answers

Answer:

option d is the correct answer hope it is correct

True or False: Although firms tend to raise their capital in large, lumpy amounts, their weighted average cost of capital (WACC) and the capital investment that they are evaluating assume that the project will be financed with the same proportion of funds contained in their target capital structure.

Answers

Answer:

True

Explanation:

The capital structure is defined as the careful balancing between the equity and the debt that the entity uses to finance its assets, day-to-day operations, and future growth.  It combines debt and equity.  Debt comes in the form of bond issues or loans, while equity may come in the form of common stock, preferred stock, or retained earnings.  The optimal capital structure is estimated by calculating the mix of debt and equity that minimizes the weighted average cost of capital (WACC) of a company while maximizing its market value.  However, in calculating the WACC and evaluating the capital investment, the timing of the capital inflow is not considered.

A bond has a $1,000 par value, 20 years to maturity, and an 8% annual coupon and sells for $1,110. What is its yield to maturity (YTM)?

Answers

Answer:

YTM = 0.070616 or 7.0616% rounded off to 7.06%

Explanation:

The yield to maturity or YTM is the yield or return that an investor can earn on the bond if the bond is purchased today and is held till the bond matures. The formula to calculate the Yield to maturity of a bond is as follows,

YTM = [ ( C + (F - P / n))  /  (F + P / 2) ]

Where,

C is the coupon paymentF is the Face value of the bondP is the current value of the bondn is the number of years to maturity

Coupon payment = 1000 * 0.08 = 80

YTM = [ (80 + (1000 - 1110 / 20))  /  (1000 + 1110 / 2)

YTM = 0.070616 or 7.0616% rounded off to 7.06%

Royal Decking has five products in its inventory. Information about the December 31, 2021 inventory is below:
Product Cost Sales Price
A $40 $60
B 80 100
C 40 80
D 100 130
E 20 30

A) Selling costs include a sales commission equal to 20% of selling price and shipping costs equal 10% of cost. What per unit value should Royal Decking use for each of its products when applying LCNRV?
B) If Royal has 1,000 units of each product, what should total inventory be on the balance sheet if the company applies LCNRV at the product level?

Answers

Answer:

Royal Decking

A) Per unit value for each of Royal Decking's products, applying LCNRV:

Product   Cost   Sales Price   NRV                          LCNRV

A              $40      $60           $44 ($60 - 12 - 4)      $40

B                80       100           $72 ($100 - 20 - 8)    $72

C                40        80           $60 ($80 - 16 - 4)       $40

D               100      130           $84 ($130 - 26 - 10)   $84

E                 20       30           $22 ($30 - 6 - 2)       $20

B. Total Inventory on the balance sheet is:

$256,000

Explanation:

a) Data and Calculations:

Ending Inventory at December 31, 2021:

Product   Cost   Sales Price   NRV                          LCNRV  Inventory value

A              $40      $60           $44 ($60 - 12 - 4)      $40          $40,000

B                80       100           $72 ($100 - 20 - 8)    $72          $72,000  

C                40        80           $60 ($80 - 16 - 4)       $40          $40,000

D               100      130           $84 ($130 - 26 - 10)   $84           $84,000

E                 20       30           $22 ($30 - 6 - 2)       $20          $20,000

Total inventory value                                           $256       $256,000

= ($256 * 1,000)

Selling costs = 20% of selling price

Shipping costs = 10% of cost

Answer:

Explanation:

To get the NRV we should proceed with this formula.

Selling price ($60)x(20%) = 12.

60-12 = 48

Cost ($40)x(10%) = 4.

40-4 = 36

Then we do this.

48 + 36 = 84

Then we subtract this number from the original cost number.

84 - 40 = 44

So the NRV of A is 44.

I am not a professor but this is the way I can teach and using this method I got my question correctly. Do the rest yourself following this example.

Common fixed expenses have been allocated equally to each of the two divisions. Carter's segment margin for the West Division is:

Answers

Answer: B. $132,000

Explanation:

When calculating the Segment margin, it is important to note that only costs that are directly traceable to the segment are to be deducted from the revenue.

The segment margin therefore is;

= Sales revenue - Variable costs - Direct fixed costs

= (50,000 * 10) - (50,000 * 6) - 68,000

= 500,000 - 300,000 - 68,000

= $132,000

discuss the notion of alienation as elaborated by Marx​

Answers

Answer:

The alienation that Marx refers to comes into being through the relations of production found in capitalist society. ... The commodities that workers produce through their labor is not their own but ultimately belongs to another and is produced for another. Here alienation is manifested in the product that work produces.

Help!
dancing is considered as labor, capital,land or entrepreneurship?​

Answers

Answer:

D. Entrepreneurship

Because 100% it's not a land or a capital. Well, it may be a labor, but mostly it's entrepreneurship.

Hope that helps you

Two sentences only. i'll give brainliest.

1. How important is elasticity in the analysis of the market?
2. What are tge relying factors of demand elasticity?​

Answers

Answer:

(1)Elasticity is an important economic measure, particularly for the sellers of goods or services, because it indicates how much of a good or service buyers consume when the price changes. ... If the market price goes up, firms are likely to increase the number of goods they are willing to sell.

(2) Many factors determine the demand elasticity for a product, including price levels, the type of product or service, income levels, and the availability of any potential substitutes. High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price

Mr. Ghani wants to deposit his savings of Rs. 50,000 in a bank which offers 8% interest compounded semi-annually to withdraw Rs. 2,500 at the end of each six months from the date of deposit. How many withdrawals will he or his heir (in case of his death) be able to make before the entire amount is exhausted

Answers

Answer:

How many withdrawals will he or his heir (in case of his death) be able to make before the entire amount is exhausted is explained below in detail explanation.

Explanation:

Let the no of withdrawals be n, then

Present value of n withdrawals = 50000

Interest rate per 6 months =8%/2 =4%

Withdraw amt/(Int rate)*(1-1/(1+interest)^n) = 50000

=> 2500/0.04*(1-1/1.04^n) = 50000

1/1.04^n = 0.2

1.04^n = 5

=> n = ln(5) / ln(1.04) = 41.03

Total 41 withdrawals of Rs.2500 can be made (with a smaller 42nd installment of less than Rs.2500)

Bathtub Refinishing Oldsmar FL

Answers

Answer:

cool

Explanation:

That’s very interesting :)

____ are the goods and materials available for sale at the beginning of a period.


Raw materials

Ending inventory

Cost of goods sold

Beginning inventory

Answers

Answer:

Beginning inventory

Explanation:

Beginning inventory refers to the finished goods that are still in the business premises at the beginning of a fiscal year. They represent the finished products that the business was not able to sell in the past period. Beginning inventory becomes part of the inventory to be sold in the current year.

Other terms that describe beginning inventory are opening inventory, opening stock, and balance brought forward.

Answer:

D- Beginning inventory

Explanation:

"I before E, except after C, or when sounded like A, as in 'neighbor' or 'weigh' is an example of a mnemonic. What memory aid does this mnemonic use?"
A. Emotional connection
B. Visual images
C. Song or rhyme

Answers

Answer:

C. Song or rhyme

Explanation:

The memory aid is the testing technique in which the students are able to recall the things by practising them many times

Here in the given situation it is mentioned that I before E exclude C etc is an example of a mnemonic

So this represents the song or rhyme memory aid so that the mnemonic could be used as the following sequence is necessary in this

hence, the correct option is C.

is the creation of real or perceived differences in goods or services.

Answers

I would say in (goods) I may be wrong but correct me plz!

Answer:product differentiation

Explanation:

'11.8. A company stocks an SKU with a weekly demand of 225 units and a lead time of 3 weeks. Management will tolerate one stockout per year. If sigma for the lead time is 175 and the order quantity is 800 units, what is the safety stock, the average inventory, and the order point

Answers

Answer:

a. 261  units

b. 661  units

c. 936 units

Explanation:

Safety stock, average inventory, and the order point can be calculated as follows according to their formulas.

DATA

Weekly Demand = 225 units

Lead time = 3 weeks

Annual Demand  = 225 units  x 52 weeks  = 11,700 units

sigma = 175

Order Quantity Q = 800

Solution

No of orders per year = Annual demand/order quantity

No of orders per year= 11700/800

No of orders per year= 14.625  orders

Service level = (no of orders-1)/no of orders

Service level = (14.625-1)/14.625

Service level = 93.16 %

Saftey factor for 93.16 is 1.49

Saftey stock = 1.49 \sigma

Saftey stock = 1.49 * 175

Saftey stock = 260.75 OR 261  units

Average inventory = Q/2 + saftey stock

Average inventory = 800/2 + 261

Average inventory = 400 + 261

Average inventory = 661

Order point = Demand during the lead time + safety stock

Order point= 225 x 3 + 261

Order point= 936 units

a. Distinguish between physical asset markets and financial asset markets. What’s the difference between spot markets and futures markets?
b. Distinguish between money markets and capital markets. What’s the difference between primary markets and secondary markets?
c. Differentiate between private and public markets. Why are financial markets essential for a healthy economy and economic growth?

Answers

Answer:

a. Physical assets are tangible, they can be touched, seen, used. They generally lose value over time because they depreciate. On the other hand, financial assets are intangible, they only exist because documents say so. Their price can change if interest rates change of if market conditions change.

Spot markets are markets where securities, currencies or commodities are traded immediately. While futures markets represent the trading of securities, currencies or commodities at a future date.

b. Money markets are where investors trades short term securities, while capital markets are where stocks, bonds and other long term securities are traded.

Primary markets exist only when securities are issued for the first time, e.g. an IPO. The vast majority of trading occurs in secondary markets since a security can literally be traded hundreds of times and all of these operations, except for the initial issuance, take place in secondary markets.

c. Public markets are all the trading markets where publicly traded corporations exchange or trade securities, and anyone can buy them, e.g. NYSE, NASDAQ, etc. Private markets only involve trading of privately held securities, e.g. stocks of closely held corporations. Only certain investors can trade with private securities, they are not available to the general public.

Financial markets basically receive savings from private households and businesses, and they transfer them (as investments) to other companies that need these resources to operate and grow. There is a direct relationship between healthy financial markets and economic development.

both retail and business banks are important to the US economy because they

Answers

Answer:

Retail businesses are important because they provide millions of jobs in the United States. According to the most recent figures, almost 10 million Americans work in retail, from cashiers to store vendors, to low-level clerks.

Business banks are important because they provide much needed deposit services and credit to businesses and individuals. The modern economy would not work without banking, and this is why the banking sector is highly regulated by the government, and often rescued in times of economic crisis.

Answer: B. Use deposits to provide loans and financing

Explanation:

A.P.E.X

Your catering business sells luncheons and dinners. Luncheons are $1,000 each, and dinners are $2,000 each. You sold 300 meals in total for revenue of $460,000. How many of each did you sell?

Answers

Answer:

140 luncheons, 160 dinners

Explanation:

The number of luncheons and dinners that are sold will be 140 and 160, respectively.

What is the solution to the equation?

The allocation of weights to the important variables that produce the calculation's optimum is referred to as a direct consequence.

Your catering business sells luncheons and dinners. Luncheons are $1,000 each, and dinners are $2,000 each. You sold 300 meals in total for a revenue of $460,000.

Let 'x' be the number of Luncheons and 'y' be the number of dinners. Then the equations are given as,

x + y = 300                                                  ...1

1,000x + 2,000y = 460,000                         ...2

From equations 1 and 2, then we have

1,000(300 - y) + 2,000y = 460,000

300,000 - 1,000y + 2,000y = 460,000

1,000y = 160,000

y = 160

Then the value of 'x' is given as,

x + 160 = 300

x = 300 - 160

x = 140

The number of luncheons and dinners that are sold will be 140 and 160, respectively.

More about the solution of the equation link is given below.

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Company acquired land and buildings for $1,000,000. The land is appraised at $450,000 and the buildings are appraised at $800,000. The debits to the Land and Buildings accounts will be:

Answers

Answer:

Debit Land for $360,000

Debit Buildings for $640,000

Explanation:

The total acquisition cost has to be allocated based on the appraisal value of each of the Land and Buildings.

Therefore, the amount to be debited to the Land and Buildings accounts can be calculated as follows:

Total acquisition cost = $1,000,000

Land appraisal value = $450,000

Buildings appraisal value = $800,000

Total appraisal value = Land appraisal value + Buildings appraisal value = $450,000 + $800,000 = $1,250,000

Amount allocated to Land = (Land appraisal value / Total appraisal value) * Total acquisition cost = ($450,000 / $1,250,000) *  $1,000,000 =  $360,000

Amount allocated to Buildings = (Buildings appraisal value / Total appraisal value) * Total acquisition cost = ($800,000 / $1,250,000) *  $1,000,000 =  $640,000

Therefore, the debits to the Land and Buildings accounts will be the allocated amounts to each as follows:

Debit Land for $360,000

Debit Buildings for $640,000

The consumer price index was 200 in 2008 and 190 in 2009. The nominal interest rate during this period was 4.5 percent. What was the real interest rate during this period

Answers

Answer:

the real interest rate is 9.5%

Explanation:

The computation of the real interest rate is shown below:

But before that inflation rate need to be determined

Inflation rate is

= [CPI this year - CPIlast year] ÷ CPI last year

= {(190 - 200) ÷ 200} ×  100

= -0.05 × 100

i = -5%

Now the real interest rate is

real interest rate = nominal interest rate - inflation rate

= 4.5% - (- 5%)

= 9.5%

Hence, the real interest rate is 9.5%

Which of these was the first government of the United States?

Group of answer choices

Constitution

Declaration of Independence

Articles of Confederation

Mayflower Compact

Answers

Answer:

Declaration of independence

Explanation:

I did that test yesterday lol

Answer:

3. Articles of Confederation

Explanation:

Hope this helps!

What are accountants most likely involved in as part of their daily activities within an organization?
A.
Preparing profit and loss statements.
B.
Working on distribution-related logistics.
C.
Contacting potential new retailers.
D.
Working on production schedules and shifts.

Answers

Answer: A

Hope this helps!!!

Answer:

What are accountants most likely involved in as part of their daily activities within an organization?

A.

Preparing profit and loss statements.

B.

Working on distribution-related logistics.

C.

Contacting potential new retailers.

D.

Working on production schedules and shifts.

Explanation:

Plato

A machine operates with the following production cycle:

29 minutes of setup, 90 minutes of production. While in production, the machine produces 4 parts per minute.

Required:
What is the capacity of the machine in parts per minute?

Answers

Answer:

The capacity of the machine in parts per minute is 3 parts per minute

Explanation:

The Total time = 29 + 90

The Total time = 119 minutes

Total production = 4*90

Total production = 360 units

The capacity = 360/119

The capacity = 3.02521

The capacity = 3 parts per minute

Thus, the capacity of the machine in parts per minute is 3 parts per minute

A manufacturer has monthly cost of 60,000 and a production cost of 10$ for each unit produced. The product sells for $15/unit.

a. What is the cost function.
b. What is the revenue function.
c. What is the profit function.

Compute the profit loss corresponding to production level of 10,000 and 14000.

Answers

Answer:

a. What is the cost function.

C(x) = 10x + 60,000

b. What is the revenue function.

R(x) = 15x

c. What is the profit function.

P(x) = R(x) - C(x) = 15x - 10x - 60,000 = 5x - 60,000

Compute the profit loss corresponding to production level of 10,000 and 14000.

10,000 units produced:

P(10,000) = 5(10,000) - 60,000 = 50,000 - 60,000 = -$10,000

14,000 units produced:

P(14,000) = 5(14,000) - 60,000 = 70,000 - 60,000 = $10,000

Answer:

1. There is a loss of $10,000 at the production level of 10,000.

2. There is a profit of $10,000 at the production level of 14,000.

Explanation:

From the question, we have:

a = Fixed cost = $60,000

b = Variable cost per unit = $10

P = price per unit = $15

Therefore, we have:

a. What is the cost function.

The cost function can be stated as follows:

C = a + bY ............................... (1)

Where;

C = total cost

a = Fixed cost = $60,000

b = Variable cost per unit = $10

Y = production level

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

C = 60,000 + 10Y <--------------- Cost function

b. What is the revenue function.

The revenue function can be stated as follows:

R = P * Y ...................... (2)

Where;

R = Total revenue

P = price per unit = $15

Y = production level

Substituting the relevant values into equation (2), we have:

R = 15 * Y ........................... <------------------ Revenue function

c. What is the profit function.

The profit function can be stated as follows:

Profit (loss) = R - C .......................... (3) <------------------- Profit function.

1. Compute the profit loss corresponding to production level of 10,000

This implies that;

Y = 10,000

C = 60,000 + (10 * 10,000) = $160,000

R = 15 * 10,000 = $150,000

Profit (Loss) = $150,000 - $160,000 = ($10,000)

Therefore, there is a loss of $10,000 at the production level of 10,000.

2. Compute the profit loss corresponding to production level of 14,000

This implies that;

Y = 14,000

C = 60,000 + (10 * 14,000) = 200,000

R = 15 * 10,000 = $210,000

Profit (Loss) = $310,000 - $200,000 = $10,000

Therefore, there is a profit of $10,000 at the production level of 14,000.

A market economy is not based on _____.


a vote

having no choices

personal choice

the public

Answers

Answer:

Personal choice

Explanation:

A market economy is not based on personal choice. Thus the correct option is C.

What is the Economy?

The economy of any country is determined by the ratio of production and consumption that takes place within a year and evaluates the flow of funds in the market by analyzing the purchasing parity of an individual.

In a free market, the manufacturing of goods and services is controlled by supply and demand principles. It is not centralized and is instead governed by the availability and demand for products and services.

A market economy is said to be a free market or not based on any personal choice as it is determined by the availability of goods and services in the market but customers can influnece the demand for a particular product.

Therefore, option C is appropriate.

learn more about the Economy, here:

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Suppose that the demand curve for chairs in Euroland is given by QD = 800,000 − 6,000P, and that the supply curve is given by QS = 14,500P - 225,000. The equilibrium price is €50.

The government is thinking about imposing a tax of €2.46 on chairs.

The price paid by buyers after the tax is

Answers

Answer:

The price paid by buyers after the tax is €51.74.

Explanation:

QD = 800,000 − 6,000P .................. (1)

QS = 14,500P - 225,000 ................... (2)

P* = equilibrium price = €50

Substituting P* into equation (1) to obtain equilibrium quantity, Q*, we have

Q* = 800,000 − 6,000(50)

Q* = 800,000 - 300,000

Q* = 500,0000

Rewrite equation (1), we have:

6,000P = 800,000 - QD

P = (800,000 / 6,000) - (1 / 6,000)QD

P = 133.333333333333 - 0.000166666666666667QD ............ (3)

Rewrite equation (2), we have:

14,500P = QS + 225,000

P = (1 / 14,500)QS + (225,000 / 14.500)

P = 0.0000689655172413793QS + 15.5172413793103 .......... (4)

With tax of €2.46, equation (4) becomes:

P = 0.0000689655172413793QS + 15.5172413793103 + 2.46

P = 0.0000689655172413793QS + 17.9772413793103

Equating equations (3) and (4), and solve for new equilibrium quantity after tax, QT, we have:

133.333333333333 - 0.000166666666666667QT = 0.0000689655172413793QT + 17.9772413793103

133.333333333333 - 17.9772413793103 = 0.000166666666666667QT + 0.0000689655172413793QT

115.356091954023 = 0.000235632183908046QT

QT = 115.356091954023 / 0.000235632183908046

QT = 489,560

To obtain the price paid by buyers after the tax, PT, we substitute QT = 489,560 for QD is equation (3) as follows

PT = 133.333333333333 - 0.000166666666666667(489,560)

PT = 133.333333333333 - 81.5933333333335

PT = 51.74

Therefore, the price paid by buyers after the tax is €51.74.

A shift of the supply curve of oil raises the price from $10 a barrel to $15 a barrel and reduces the quantity demanded from 40 million to 15 million barrels a day. You can conclude that the ___________.
A. demand for oil is inelastic
B. demand for oil is elastic
C. supply of oil is elastic
D. supply of oil is inelastic

Answers

Answer:

Option B: demand for oil is elastic

Explanation:

Price elasticity of demand is generally note to be the magnitude (degree) responsiveness of quantity demanded of goods/services to a change in price of goods and services.

A demand for goods and services is said to be elastic if the demand by consumer is relatively sensitive to changes in price.

The long-run demand for oil is usually elastic than the short run demand for oil.

A 37-year-old client experienced a perinatal loss 3 days ago. Which client characteristic would be communicated to the health care provider?

Answers

Answer:

Denial of the death

Explanation:

A loss of a Child to a mother is not usually acceptable at first to the mother. A woman at 37 who is advance has slimmer chance of getting pregnant and the woman at 37, having a pregnancy and lossing the baby is not easy to deal with. Parental loss and bereavement is really had for a 37 year old mother who at first may not accept the death of the child but proper care will bring the mother back to full consciousness.

Other Questions
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