blossom co. sells $401,000 of 6% bonds on March 1, 2023. the bonds pay interest on september 1 and march 1. the due date of the bonds is september 1, 2026. the bonds yield 9%. construct an amortization table
Q: Calculate the number of option A and Option B contracts to make your portfolio gamma and Vega…
A: To make your portfolio gamma neutral, you need to offset the current gamma exposure of -7000 with an…
Q: Which of the following is NOT true? In risk-neutral valuation the risk-free rate is used to discount…
A: Risk-neutral valuation produces a valuation that is correct in all situations not just those where…
Q: Angie’s Bakery bakes bagels. The June production is given below. 290 290 290 450 290 290 330 290…
A: The relative weight or importance of each data point in a set is taken into consideration by the…
Q: Sabine Co has outstanding bonds with 10 years remaining until maturity, a coupon rate of 7%,…
A: Data given: Coupon rate=7% (semi-annual) N=10 years Par value=$1000 Market price=$1000 * 96.5%=$965…
Q: What is the required rate of return on this stock?
A: To calculate the required rate of return on the stock, we can use the dividend discount model (DDM)…
Q: Jeffersons are considering selling their current residence, buying a small home near Avery’s parents…
A: Mortgage loans are very common when buying homes and these secured loans against home as collateral…
Q: As the number of stocks in a portfolio decrease, the portfolio's unsystematic risk will O A.…
A: Unsystematic risk develops as a result of elements that are peculiar to a given business or sector,…
Q: Investment A has a future value of $600. Investment B has a future value of $500. Both have the…
A: The idea of the time value of money (TVM) holds that a quantity of money is worth sooner than it…
Q: Identify the individuals that will take a job under the ELR program. Be sure to include your…
A: To complete your assignment, you need to analyze the potential impact of an Employer of Last Resort…
Q: You might want to sell an option to prevent further losses if its market price is dropping. True…
A: Selling an option to prevent further losses when its market price is dropping is not a good…
Q: If he holds a $12.0 million portfolio of Waterworks stock and wishes to hedge market exposure for…
A: hedging ratio is (value of the portfolio/future contracts)*beta of the portfolio future contracts…
Q: Thomas has $1,000 in his bank account today to spend on a TV. Thomas needs exactly $1,070 to…
A: This is based on the concept of the time value of money. Money invested or deposited today grows in…
Q: Assume that two stocks are available. The first stock (Stock A) has an expected return of 25% and a…
A: The minimum variance portfolio refers to the mix of risky assets taken in such a proportion as to…
Q: Kate and her brother Rustin own a piece of property in Dallas as tenants in common valued at…
A: Co-owners of a tenancy refers to multiple individuals or entities who jointly hold ownership rights…
Q: machinery costing $420,000. The Sisyphean Company expects cash inflows from this project as detailed…
A: Years Cash Inflow / Outflow PV Factor @ 17% PV of Cashflows 0 -4,20,000.00…
Q: what is Thread Financial Analysis?
A: Financial reporting is a detailed record of all corporate activities, including costs and profits,…
Q: Find the ratio of the present value of B's share to D's share.
A: Let's denote the payment amount as P, and the present value of A's share as V_A, B's share as V_B,…
Q: You find the following corporate bond quotes. Assume that it is currently January 15, 2022. The…
A: Bond refers to the financial instrument that are issued by the government in against of providing…
Q: Dr. Doe has been contributing $5,250 to her savings account twice a year every year for 22 years.…
A: Annuity is a series of equal cash flow payment at equal interval for a specified period of time.…
Q: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio…
A: A portfolio that has been perfectly balanced between risk and return is said to be optimum. The best…
Q: Sub : Finance Pls answer very fastt.I ll upvote. Thank You The Rusty Auto Parts Company has…
A: Cost of Inventory = Sales - Markup amount
Q: Can you answer part 4
A: Stock beta = 1.38 Expected return = 13.6% Risk free rate = 4.7%
Q: The spot asset price is $53. A call on the asset with a strike price of $54 has a premium or of…
A: Call option gives the holder of the option , the right and not obligation to buy underlying asset at…
Q: 10-yr bond, par value = $1000 Selling price = $1,134.20 10.0% annual coupon rate Callable after 4…
A: YTC is also called as Yield to Call. It is a capital budgeting techniques which help in decision…
Q: Porter Company is analyzing two potential investments. Initial investment Net cash flow: Year 1 Year…
A: The term "payback period" refers to the amount of years needed to recoup the initial monetary…
Q: could someone please explain to me why the decrease in stock price ( from 20th April) for the west…
A: The WTI works as a global oil benchmark and it is used to reflect the movement in crude oil prices.…
Q: Seeing the Financial Side of Business RA Dr. Stephen Hill, a successful optometrist in Indianapolis,…
A: Financial institutions' main function is to act as middlemen between borrowers and lenders. They…
Q: Refer to the stock options on Microsoft in the Figure 2.10. Suppose you buy a November expiration…
A: The option represents a financial derivative that provides the right to buy or sell the underlying…
Q: WellyWeta workshop is considering buying a machine that costs $545,000. The machine will be…
A: A lease agreement defines the responsibilities of both parties regarding the maintenance and repair…
Q: What is the value of your country’s currency to the US dollar (you must give direct and indirect…
A: When the country of China is selected as my country then, the home currency is the Chinese Yuan and…
Q: a_(n)=8-3n
A: The common difference in a sequence refers to the constant value by which each term in the sequence…
Q: A European call and a European put on a stock have the same strike price and time to maturity. At…
A: Call and Put Option: On the derivatives market, the two primary options are call option and put…
Q: she will earn the same annual effective interest rate as the zero-coupon bond. Calculate X.
A: To calculate the value of X, we need to equate the present value of the cash flows from the…
Q: An HVAC technician is comparing pension plans for two different job offers. First offer: $58,000…
A: Monthly pension payments refer to the payments made every month including the amount of basic and…
Q: Which of the following is a problem associated with capital budgeting? Select all that apply.…
A: capital budgeting helps organizations make well-informed investment decisions, manage risks, and…
Q: ULTIPLE CHOICE. Answer the following: 1.It show how efficient the business is as to its purchase or…
A: Ratios are very important in the comparing the performance of company with other similar companies…
Q: Your company are offered a bank loan with an annual percentage ate (APR) of 5 percent with quarterly…
A: We need to use effective annual rate formulas below Effective annual rate = 1+rnn -1 r =…
Q: An investor with an investment horizon of 6 years buys a bond with a modified duration of 6.0. if…
A: The concept of duration gases important part in the bone valuation because said that the difference…
Q: A firm is considering an investment opportunity. The firm’s cost of capital for this project is 14%.…
A: Cost of capital = r = 14% Initial Investment = $10 million Cash flow in year 1 = cf1 = $868,000 Cash…
Q: Company A can borrow at 6% or LIBOR + 0.2%, and prefers floating-rate borrowing. Company B can…
A: Swap arrangement is that under minimum two parties are involved which have required same amount of…
Q: Tom Corp has 5.5 million shares of common stock outstanding. The current share price is $83 and the…
A: Weighted average cost of capital(WACC) is average cost of capital. WACC = Weight of equity*Cost of…
Q: Flowers by Irene Inc. is a small company and is considering a project that will require $700,000 in…
A: Assets required = $700,000 Tax rate = 25% Project financing = 100% equity EBIT = $150,000
Q: The current price of a non-dividend paying stock is $30. Use a two-step tree to value a European…
A: The binomial options pricing model refers to the technique of pricing options where the price of the…
Q: Company Y has a target debt ratio of 55%. Currently its debt ratio is 60% and it expects to revert…
A: Here, Target Debt Ratio is 55% Cost of Equity is 20% Interest payment is R1,000,000 Liabilities is…
Q: A telephone company purchased a microwave radio equipment for P 6M. Freight and installation charges…
A: As per the given information: Microwave radio equipment purchased for - P6MFreight and installation…
Q: Calculate the rate of return on a price-weighted index of the three stocks for the first period (t =…
A: A price-weighed index represents a stock index where each firm included makes up for part of the…
Q: The price of a non-dividend paying stock is now $40. Over each of the next two three-month periods…
A: The binomial options pricing model refers to the technique of calculating prices of the derivative…
Q: nomas has started working, and he is wondering how much he needs to put aside every mont TV IN 2…
A: Due to the compounding of interest over the period of time large amount is being accumulated over…
Q: You take a small business (SBA) loan for $90,000. The current annual interest rate on SBA loans is…
A: Loan Amount = a = $90,000 Interest rate = 6%
Q: You have $7000 to invest. The mutual fund you are considering offers two classes of shares. Class A…
A: Class A Mutual fund Class B Mutual fund Investment Amount 7000 Investment Amount 7000…
Subject:
Step by step
Solved in 3 steps with 3 images
- Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premiumWilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
- Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortizationChung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of discount
- Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
