Who benefits more from the drop in the market interest rate

Assignment Help Financial Accounting
Reference no: EM131292584

a. What is the present-day value of a 10-year discount bond with a face value of $1000 if the market interest rate is 7%?

b. What is the present-day value of a 10-year coupon bond with a face value of $1000 and a coupon rate of 7% (i.e., yearly interest payment of $70) if the market interest rate is 7%?

c. Suppose the market interest rate falls to 5%. Is this good news for the holders of the above two bonds? Why or why not?

d. Who benefits more from the drop in the market interest rate – the holders of the 10-year discount bonds or the holders of the 10-year coupon bonds? Explain why, preferably with the help of some math.

Reference no: EM131292584

Questions Cloud

Are there any strategic misfits : Are there any strategic misfits? What should management do about them, if anything?-  Do a delta analysis where Government Systems has a prospector strategy?
Obtain the relevant flow parameters from the usgs website : Consider the most soluble component of diesel (conduct a literature survey) and determine how fast it will move with the water to the nearest community down river. You will have to obtain the relevant flow parameters from the USGS website
Write the obituary about the historical work : write the obituary, you must utilize at least three sources. ONE source must be a biography or historical work written about your figure. I recommend that you use historical journal articles. At least three reputable sources must be used for full ..
Computer innovations in information technology today : Explain the role of early computer innovations in information technology today. Explain the benefits and drawbacks to outsourcing in at least three different countries. Identify the countries, the reason to outsource to them, and the drawbacks and be..
Who benefits more from the drop in the market interest rate : What is the present-day value of a 10-year discount bond with a face value of $1000 if the market interest rate is 7%? Suppose the market interest rate falls to 5%. Is this good news for the holders of the above two bonds? Why or why not? Who benefit..
Organization founders-leaders and history : At least 5 pages, APA formatHow culture emerges in an organization and how it links to organization's founders, leaders, and history.The significance of reasoning for organizational culture change.
What are the corresponding changes in bap air concentrations : It is estimated that 2500 vehicles per hour with 12% hdv mix, moving at an average speed of 46 km/h transits through the tunnel. If the estimated emission factor for BaP was 40μg/km in 1961 and 5μg/km in 2004, what are the corresponding changes in..
Describe the stakeholders position on health care reform : Prepare a PowerPoint presentation containing 10-15 slides in which you - Describe the stakeholders position on health care reform.
Communication across genders : Communication Across Genders Please study communication across genders. Apply the following guidelines in ALL of your assignments:

Reviews

Write a Review

Financial Accounting Questions & Answers

  Compute the applied overhead for byrd for the year

Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. Compute the applied overhead for Byrd for the year. Compute the total overhead variance.

  Prepare an income statement for the month of may

Prepare an income statement for the month of May and prepare a balance sheet at May 31, 2012.

  Evaluate the company''s total required production

Evaluate the company's total required production in units of finished product for the whole three month period ending September 30.

  About the regular tax liability

Palmdale Corporation has a regular tax liability of $94,000. It is eligible for a $54,000 general business credit for the current year and has a $30,000 general business credit carryover from the prior year. a. What is Palmdale’s allowable general bu..

  Prepare the journal entries assuming commercial substance

Truck Company trades its used delivery trucks for new models at Greenwich GMC. The used trucks have a book value of $60,000 (original cost $140,000 less $80,000 accumulated depreciation). The new trucks have MSRP of $80,000. Prepare the journal entri..

  What are the issues to consider in calculating the roi

What are the issues to consider in calculating the return on investment (ROI), residual income (RI), and EVA® for a highly innovative company?

  Compute the applicable overvaluation penalty

John, a calendar-year taxpayer subject to a 34 percent marginal tax rate, claimed a charitable-contribution deduction of $15,000 for a sculpture that the IRS later valued at $10,000. Compute the applicable overvaluation penalty. Show your calculation..

  Calculate the cost to be allocated to type 1 and type 2

Calculate the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. Don't round your intermediate calculations

  Prepare a five year table to amortize the premium

The market rate of interest on this date is 8%, and Stacy Company receives proceeds of $10,803 on the bond issuance. Prepare a five year table to amortize the premium using the effective interest method.

  Transaction price for multiple performance obligations

Transaction price for multiple performance obligations should be allocated

  Should a gain or loss on restructuring of debt be recognized

Should a gain or loss on restructuring of debt be recognized? Should a gain or loss on the disposition of assets be recognized?

  Determine the dollar amount of dividends declared

No other changes to stockholders equity occurred during the year Determine the dollar amount of dividends declared by the company during the year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd