Answer:
Option D, 110, is the right answer.
Explanation:
Total number of shares that short = 100 share
The rate of dividend that ABC declares and pays = 10%
Now we have to find the number of shares that should be purchased in order to close out the short position.
Number of shares = 100 × 110%
Number of shares = 100 × (110 / 100)
Number of shares = 110
Thus, option D 110 is correct.
Answer:
$844,000
Explanation:
Given that,
Accounts Receivable = $900,000
Credit balance of Allowance for Doubtful Accounts per books before adjustment = $50,000
Expected amount of uncollectible = $56,000
Bad debt expense at the end of the period is determined by subtracting the credit balance of allowance for doubtful accounts from the expected amount of uncollectible.
Bad debt expense:
= Expected amount of uncollectible - Credit balance
= $56,000 - $50,000
= $6,000
At the end of the period, the allowance for doubtful accounts has a balance of $56,000 that are to be uncollectible.
The cash realizable value of the accounts receivable at December 31, after adjustment, is determined by simply subtracting the Allowance for doubtful accounts from the accounts receivable. It is calculated as follows:
= Accounts Receivable - Allowance for doubtful accounts
= $900,000 - $56,000
= $844,000
Answer:
Please see below the journal entries of Ayayai Corporation for the year ending 2016 and 2017 respectively.
Explanation:
Ayayai Corporation
Journal Entries
For the Year ending 2016
Debit: Research & Development Expense $144,000
Credit: Cash $144,000
To record research and development expense.
Debit: Patent $17,400
Credit: Cash $17,400
To record legal cost relating to Patent.
Debit: Amortization Expense $435
Credit: Patent $435
To record amortization expense for the pro rated year.
Ayayai Corporation
Journal Entries
For the Year ending 2017
Debit: Amortization Expense $1,740
Credit: Patent $1,740
To record amortization expense for year.
AMORTIZATION EXPENSE CALCULATION:
Legal Cost = $17,400
Useful Life = 10 Years
Amortization Expense = Legal Cost / Useful Life
Amortization Expense = $17,400 / 10
Amortization Expense = $1,740 per year
But since in 2016 the patent was obtained on October 1, so Ayayai Corporation will have to pro rate the Amortization Expense in 2016 as below:
Amortization Expense = Annual Amortization Expense x No. of months / Total no. of months
Since patent was obtained in October so the No. of months is '3'
Amortization Expense = $1,740 x 3 / 12
Amortization Expense = $435
Answer:
AYAYAI CORPORATION
JOURNAL ENTRIES
Date Description DR CR
2016
Research and developemnt $144,000
Cash $144,000
Being the amount spend on research and development
OCt 1 Patent $17,400
Cash 17,400
Dec 31 Amortization Expense $435
Accumulated amortization $435
2017 Amortization Expense $1,740
Accumulated amortization $1,740
Explanation:
Answer:
(a) What is the yield to maturity (annual compounding) on the bond?
Yield to maturity (YTM) = (face value / market price)¹/ⁿ - 1
YTM = ($1,000 / $800)⁰°² - 1 = 0.0456 or 4.56%
(b) Assume the yield to maturity on comparable zeros increases to 7% immediately after purchasing the bond and remains there. Calculate your annual return (holding period yield) if you sell the bond after one year.
holding period yield = (end of period value - initial value) / initial value
initial value = $800
end of period value = ?
to determine the end of period value we must solve:
7% = ($1,000 / ?)⁰°²⁵ - 1
1.07 = ($1,000 / ?)⁰°²⁵
1.07⁴ = $1,000 / ?
? = $1,000 / 1.3108 = $762.90
holding period yield = ($762.90 - $800) / $800 = -4.64%
(c) Assume yields to maturity on comparable bonds remain at 7%, calculate your annual return if you sell the bond after two years.
1.07³ = $1,000 / ?
? = $1,000 / 1.225 = $816.30
holding period yield = ($816.30 - $800) / $800 = 2.04%
annualized return = (1 + total return)¹/ⁿ - 1 = (1 + 0.0204)¹/² - 1 = 1.01%
(d) Suppose after 3 years, the yield to maturity on similar zeros declines to 3%. Calculate the annual return if you sell the bond at that time.
1.03² = $1,000 / ?
? = $1,000 / 1.0609 = $942.60
holding period yield = ($942.60 - $800) / $800 = 17.83%
annualized return = (1 + total return)¹/ⁿ - 1 = (1 + 0.1783)¹/³ - 1 = 5.62%
This business related question deals with the calculation and understanding of yield to maturity and holding period yield related to a zero-coupon Treasury bond. The yield to maturity is the estimated total return if a bond is held until it matures. The holding period yield is dependent on the current market conditions and may alter if the bond is sold before it reaches its maturity.
To answer these questions, you first need to understand key concepts related to bonds. A zero-coupon bond is a bond that doesn't give regular interest payments to the investor. Instead, the investor purchases the bond for a price lower than its face value, then receives the face value when the bond reaches maturity. The difference represents the investor's profit.
Let's handle each sub-question in the context of a five-year zero-coupon Treasury bond that you bought for $800 but has a face value of $1000:
a) The yield to maturity (YTM) is the total return anticipated on a bond if it is held until it matures. Yield to maturity is expressed annually as a percentage. In this case, the equation to solve for yield to maturity is: $1,000 = $800*(1+YTM)^5. Normally, it's impossible to directly solve this equation for YTM (without using calculators or software with financial functions), making it a more complex business topic.
b & c) The holding period yield is different than the yield to maturity and takes into account the current market conditions. In this scenario, if interest rates were to rise to 7%, the bond's value would decrease, impacting your returns if you decided to sell before maturity.
d) The same concept applies if yield to maturity changes after 3 years or at any other time before maturity. An alteration in the market interest rates would affect the price at which you could sell your bond, hence influencing your annual return.
#SPJ11
Answer:
* Profit from buying the call with strike price of $50 after six months if:
- The stock price is $40: -$9
- The stock price is $50: -$9
- The stock price is $60: $1
* Profit from buying the put with strike price of $50 after six months if:
- The stock price is $40: $9
- The stock price is $50: -$1
- The stock price is $60: -$1
Explanation:
It is useful to recall that the call's buyer has the right but not the obligation to buy an underlying asset at strike price at expiration date; while the put's buyer has the right but not the obligation to sell an underlying asset at strike price at expiration date.
Explanation for each circumstances:
*Profit from buying the call with strike price of $50 after six months if:
- The stock price is $40: Do not exercise the call option as investor can buy from the market at $40 instead at the strike price of $50. Thus, investor will recognize a loss of $9 from buying the option.
- The stock price is $50: Market price is equal to strike price, investor will recognize a loss of $9 from buying the option.
- The stock price is $60: $1. Investor buy at strike price $50, sell in the market for $60 to get profit of $10, minus option price of $9, net gain is $1.
* Profit from buying the put with strike price of $50 after six months if:
- The stock price is $40: Investor buy from market at $40, sell through put option at $50, recognized the profit of $10. Net gain will be determined by further deducting of option price $1, to come at $9.
- The stock price is $50: Market price is equal to strike price, investor will recognize a loss of $1 from buying the option.
- The stock price is $60: Investor ignore the option as it can sell at market price of $60 instead of strike price $50. Net loss is option price $1.
Answer: Incentives
Explanation:
Incentive Fees which can also be known as Performance Fees are an ADDITIONAL form.of compensation that are tied to an Employee's salary based on their level of performance or more specifically, their level of Financial return.
They can be calculated in various ways but the main goal is to encourage the employee to keep up the good work.
Endrik received the Incentive of a large bonus check for Exceeding the Sales expectations of the company. This will spur him to keep up the good work.
Answer:
Explanation:
Antonio used the value of money as a unit of account to compare the value of the two cars namely Super and Duper and come to the conclusion that Duper was cheaper to Super
Antonio saved $ 4000 in his checking account which he gave to the seller. This represent money's role as a store of value
Antonio write a check of the money he saved to the seller and the seller accepted it and gave him the car which fulfill the role of money as a medium of exchange.