Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $2.8 million per year to beneficiaries. The yield to maturity on all bonds is 13.5%. If the duration of 5-year maturity bonds with coupon rates of 13.2% (paid annually) is 4 years and the duration of 20-year maturity bonds with coupon rates of 6% (paid annually) is 11 years, how much of each of these coupon bonds (in market value) will you want to hold to both fully fund and immunize your obligation? (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place. Omit the sign "$" in your response.) What will be the par value of your holdings in the 20-year coupon bond? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. Omit the "$" sign in your response.)
Answers
The market value required to fully fund and immunize the obligation is $20.2 million in 5-year coupon bonds and $18.2 million in 20-year coupon bonds. The par value of holdings in the 20-year coupon bond is $18.18 million.
In order to fully fund and immunize the obligation, the total market value required is the present value of the obligation which is the annuity multiplied by the present value factor for an annuity. The present value factor for an annuity with a 13.5% yield to maturity is 8.06. Therefore, the total market value required is $2.8 million x 8.06 = $22.5 million.
To immunize the obligation, the portfolio must be composed of bonds with maturities that match the duration of the obligation. The duration of the 5-year coupon bond is 4 years and the duration of the 20-year coupon bond is 11 years. Therefore, the market value of 5-year coupon bonds required is $22.5 million x (4/15) = $20.2 million and the market value of 20-year coupon bonds required is $22.5 million x (11/15) = $18.2 million. The par value of the 20-year coupon bond is $18.2 million divided by the market price which is 1.
Overall, the market value required to fully fund and immunize the obligation is $20.2 million in 5-year coupon bonds and $18.2 million in 20-year coupon bonds. The par value of holdings in the 20-year coupon bond is $18.18 million.
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Related Questions
Caleb owns a small business in houston. what should caleb do to encourage creativity among his employ?
a. caleb should avoid making innovation everyone's responsibility.
b. caleb should build an organizational culture based on hierarchy rather than on adhocracy.
c. caleb should avoid hiring knowledge brokers.
d. caleb should fire all the maverick employees working for him.
e. caleb should put as many promising ideas to the test as possible.
Answers
Caleb owns a small business in Houston. Thus, to encourage creativity among his employ Caleb should put as many promising ideas to the test as possible.
Creativity represents the ability to develop new or imaginative ideas and turn them into a reality. Businesses can use creativity in the workplace to create innovative solutions or more positive and collaborative work environments. Creativity promotes employees to think outside of the norm and experiment. Creativity in business is a way of thinking that inspires, challenges, and helps people to find innovative solutions and create opportunities out of problems. It's the reason some companies wow us with new, amazing ideas, whilst others merely follow the beaten path. It's the source of innovation and inspiration.
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Why can you win a presidential election without winning the most individual votes?
Answers
Answer:
Because of Electoral College system
Explanation:
Answer:
You can win when you get more electoral college votes than your opponent. The first to 270 votes wins the race.
Explanation:
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Is government-subsidized flood insurance more likely to help relatively rich people or relatively poor people? Will it increase, decrease, or leave unchanged the amount of damage occurring from floods?
Answers
Answer:
Policy (SFIP), actually touches and damages NFIP-insured property. A loss caused
by a flood in progress at the time an SFIP comes into effect may be subject to the
flood-in-progress exclusion. If the SFIP was effective prior to the date the flood in
progress began, coverage will be effective. A flood is in progress on the earlier of
either the date the community in which the NFIP-insured property is located first
experiences a flood as defined in the SFIP, or on the date of an event initiating a
flood that directly or indirectly affects areas downstream or in a floodway.
70. Is damage caused by a flood in progress covered?
If a policy is in effect on the date the flood in progress begins, damage caused
by the flood in progress is covered, subject to the terms of the SFIP. If a policy
is effective after the date the flood is in progress, damage caused by the flood in
progress most likely will not be covered. However, each NFIP claim is adjusted
individually and the cause of any loss, and any applicable limitations or exclusion
in the SFIP, is determined during the claims adjustment process.
Explanation:
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ECON please answer this question ASAP
Answers
the question is in the picture, please help!!
Answers
Answer: At a trial in a U.S. District Court, witnesses give testimony and a judge or jury decides who is guilty or not guilty — or who is liable or not liable. The appellate courts do not retry cases or hear new evidence. They do not hear witnesses testify.
Explanation:
When the economy slips into a recession, normally the demand for bonds ________, the supply of bonds ________, and the interest rate ________, everything else held constant. a. decreases; increases; rises b. decreases; decreases; falls c. increases; increases; rises d. increases; decreases; fal
Answers
Answer:
b. decreases; decreases; falls.
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.
In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.
The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.
Recession can be defined as a period of economic meltdown, in which there's a general decline in all economic activities such as trade.
Hence, when the economy slips into a recession, normally the demand for bonds decreases, the supply of bonds decreases, and the interest rate falls, ceteris paribus (everything else held constant).
You are a valuable member of the student store staff. You handle many of the cash box transactions, moving the daily cash between the store and the office, where it is held overnight. You remember that you needed to have cash to reserve your spot on the senior trip today, and your wallet is empty. You have the money at home, but forgot to pick it up this morning. You can’t ask your friends because they don’t carry that much cash, and no one is at your house to bring it over. You know how the money is moved around through the student store, and could "borrow" the money from the cash box until tomorrow, and nobody would probably know. How do you proceed?
Answers
Answer:
I can put a call through to the organisers of the trip explaining that I have cash but it's not within reach and that if they reserved the spot for me, they'd get the money as soon as I can access it. Given that I am a valuable member of the student store staff, that reputation should count in times like this.
To borrow money from the cashbox would be a huge ethical risk and can easily be termed mismanagement of funds especially where the store policy does not allow such.
My value in the store lies largely on my integrity and the trust they students have invested in my person.
I'd rather miss the road trip than make a regrettable unethical decision.
Cheers!
Answer:
Taking money from the cash box would be stealing—it would be unethical. Instead, I would call a family member or a friend and request someone to lend me the money. In case this does not work, I‘d call the concerned organizers and try to convince them to allow me to bring in the money the following day.
Explanation:
according to the video, small businesses hire more than _____ percent of all private sector employees, and according to the chapter, they employ fewer than roughly _____ people a 80; 250 b 60; 250 c 50; 500 d 98; 500 e 99; 1,000
Answers
According to the video, small enterprises hire more than 50 percent of all private sector workers, and according to the chapter, they employ less than around 500 individuals .
This is further explained below.
What are small businesses?Generally, Companies that fall under the "small business" category often have fewer employees than larger enterprises and/or earn less annual revenue.
In conclusion, According to both the chapter and the video, small businesses are responsible for more than half of all employees in the private sector. Furthermore, according to the chapter, small businesses are defined as having less than about 500 employees.
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Thinking about your office or college, what types of
information are conveyed through the grapevine? How
often is the information accurate?
Answers
Answer: I would experience a lot of cluster chains speaking on if someone was in trouble. An employee would be called to the back office if they were either in trouble or getting a promotion.
Explanation:
Why price will be low in a market economic system?
Other than competitors
Answers
Answer:
In a market economy Price is determined by demand and supply, for example when there is a low price for a good it means the demand is low. However in market economy price for abundant goods never gets high to a critical point due to the fact of consumer sovereignty environment which consumers are the rulers for suppliers.
Checking account transactions are NOT reported to the credit bureaus and do not affect your credit score. Why is it still important to manage your checking account well?
Answers
Answer: Too see if anyone is stealing or charging extra fees
Explanation:
Imagine you are a training and development specialist.
You are tasked with creating a training workshop about strong meeting facilitation. Create an outline for this workshop.
Include:
Medium: Is your training in-person, webinar, online, or some other method? Objectives: What are your intended outcomes?
Outline: What information topics will you deliver on? What activities will you ask the people in the training to do, individually and in groups? How will the content be organized?
Deliverables: What will you have attendees produce or accomplish by the end of the training to show that they have absorbed the information?
Evaluation: What can you do at the end to measure participants' feelings about the training?
Answers
The goal of training session is to provide attendees with knowledge, skills, and understanding that they can apply in their work or personal lives.
What is training?Training is the process of teaching or learning a particular skill, knowledge, or behavior through practice and instruction. In the context of machine learning, training refers to the process of teaching a computer algorithm to recognize patterns and make predictions based on input data. During training, the algorithm is fed a large amount of data, along with the correct outputs, and it adjusts its parameters to minimize the difference between the predicted output and the actual output. This process is repeated over many iterations until the algorithm can accurately make predictions on new, unseen data. Training is a crucial step in developing effective machine learning models and is essential for a wide range of applications, from image recognition and natural language processing to self-driving cars and fraud detection.
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A design firm wants to hire a senior manager to oversee its architecture division. four applicants and their qualifications are listed in the chart. a 2-column table with 4 rows titled job qualifications of applicants. column 1 is unlabeled with entries samuel, hayley, rhonda, enrique. column 2 is labeled qualifications with entries has been in the field 2 decades, designed many buildings as an architect, wants to move into management; has been a manager for a decade, designed many buildings as an architect, has supervised projects for clients; has been in the field for 7 years, designed many buildings as a mechanical engineer, wants to move into management; has been in the field for 7 years, designed many buildings as a mechanical engineer, wants to move into management. which candidate will most likely get the job? samuel hayley rhonda enrique
Answers
The candidate will most likely get the job is Hayley. Check the reason for the above answer below.
Who is an architect?The person who is architect is known as a person that is responsible for the planning, designs and the management of a building work.
Conclusively, The candidate will most likely get the job is Hayley because he is known to be the manager for a long time and he has designed many buildings as an Architect.
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Answer:
Hayley. 100%
Explanation:
Not Wrong.
for each definition (or portion of a definition) in the first column, select the term that most closely applies. each term may be used only once or not at all.
Definition (or Portion)
a. Representations by management that are communicated, explicitly or implicitly, i n the financial statements.
b. A description of the nature, timing, and extent of the audit procedures to be performed.
c. An estimate of the time required to perform each step in the audit.
d. The purpose of this document is to avoid misunderstandings between the auditors and the client.
e. The risk of material misstatement of an assertion about an account without considering internal control.
f . At the overall engagement level, this is the risk that the auditors may unknowingly fail to appropriately modify their opinion on financial statements that are materially misstated.
g. An identified risk that requires special audit consideration.
h. A risk that threatens management's ability to achieve the organization 's objectives.
Term
Audit plan
Assertions
Audit risk
Representation letter
Business risk
Control risk
Engagement letter
Inherent risk
Significant risk
Survival risk
Time budget
Answers
Representations by management that are communicated, explicitly or implicitly, in the financial statements is Assertions. A description of the nature, timing, and extent of the audit procedures to be performed is Audit plan.
An estimate of the time required to perform each step in the audit is Time budget.
The purpose of this document is to avoid misunderstandings between the auditors and the client is Engagement letter.
The risk of material misstatement of an assertion about an account without considering internal control is Inherent risk.
At the overall engagement level, this is the risk that the auditors may unknowingly fail to appropriately modify their opinion on financial statements that are materially misstated is Audit risk.
An identified risk that requires special audit consideration is Significant risk.
A risk that threatens management's ability to achieve the organization's objectives is Business risk.
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According to _____, location-specific advantages are of considerable importance in explaining both the rationale for and the direction of foreign direct investment.
Multiple Choice
a. the infant industry argument
b. market imperfections theory
c. internalization theory
d. the eclectic paradigm
e. Knickerbocker's theory
Answers
The correct option d. the eclectic paradigm. According to the "eclectic paradigm," location-specific benefits play a significant role in describing the motivation behind and course of foreign direct investment.
Explain about the foreign direct investment?The goal of obtaining a long-term interest in a company located in another economy by an investor from one economy is reflected in the type of international investments known as foreign direct investment (FDI).
For instance, a US business may buy stock in a foreign firm that provides it with all the raw resources it requires. A corporation invests together in foreign company that is irrelevant to its main business in a conglomerate FDI.Economic theory, also referred to as the OLI model as well as OLI framework, is the eclectic paradigm. It gets over the drawbacks of fragmentary theories of global production and offers a comprehensive framework in which alternative and related theories of global production can coexist.Thus, according to the "eclectic paradigm," location-specific benefits play a significant role in describing the motivation behind and course of foreign direct investment.
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In September, you made a profit of $5,456,963 with expenses of $2,456,654. What was your total revenue?
Answers
The total revenue when the profit and expenses are given so it should be considered as the $7,913,617.
Calculation of the total revenue:We know that
Profit is $5,456,963
And, expenses is $2,456,654
We know that
Profit = Revenue - Expenses
$5,456,963 = Revenue - $2,456,654
So, the revenue is
= $5,456,963 + $2,456,654
= $7,913,617
Hence, The total revenue when the profit and expenses are given so it should be considererd as the $7,913,617.
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Which term best completes the outline?
?
economy
Economic freedom
Competition between businesses
Decisions motivated by profit
O A. Traditional
B. Mixed
C. Market
D. Command
Answers
Answer:
C. Market.
Explanation:
An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.
Hence, a region's or country's economy is largely dependent on how resources are being allocated and utilized, how many goods and services are to be produced, what should be produced, for whom they are to be produced for and how much money are to be spent by the consumers to acquire these goods and services.
Basically, there are four (4) main types of economy and these are;
I. Mixed economy.
II. Command economy.
III. Traditional economy.
IV. Free market economy.
A free-enterprise system also referred to as capitalism or free market can be defined as a type of economy in which prices, products and services are being determined by the market rather than the government. Thus, a free-enterprise system is devoid (free) of government regulations, interference or control because the market (enterprises) are the ones who are saddled with the responsibility of determining the market forces.
Simply stated, a free-enterprise system is a type of economy that is completely driven by demand and supply of goods and services.
The four (4) main elements or characteristics of a free enterprise system includes the following;
a. Profit: businesses are all out to generate revenue and profit through the sales of finished goods.
b. Economic freedom: means of production of goods and services are controlled by the people rather than the government. Thus, the producers are free to make their economic choices or decisions such as deciding on how much is to be charged on a product.
c. Private ownership of properties: the various factors of production are owned and allocated by the people. Thus, citizens have rights to the ownership and use of private property.
d. Competition: there are many buyers and sellers of homogeneous products, as well as free entry and exit in the market. Thus, consumers are free to make their economic choices or decisions such as deciding on which product to buy, which goods interest them, where to shop for goods, etc.
In conclusion, a market is characterized by the following economy;
I. Economic freedom
II. Competition between businesses
III. Decisions motivated by profit
is command
Explanation:
trust me
Disadvantages of choosing a job that is extremely popular or in demand
Answers
The disadvantage of choosing a job that is very popular or a job that is in high demand is that after a while such a job may become saturated or it would become monotonous.
What is a high demand job?This is the term that is used to refer to a job that the people that wpould employ labor are constantly in need of. Such a job is one that would require the people that have the qualification to opt in and get the places and the roles that they are to fill.
The issues that may arise from such a job that is in high demand is that after a period, such a job may have a lot of persons that would want to fulfil the role.
The number of qualified persons may become more than the job that is available for the people to do in the long run.
Hence this is a disadvantage. Therefore I would conclude by saying that the disadvantage of choosing a highly popular job is that the number of persons that are willing to fulfil the role may exceed the job overtime.
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Complete the following statement. Merchandise inventory that is still available for sale is considered a(n) ________ (asset/expense/revenue) and is reported on the ____________ (balance sheet/income statement) and merchandise that is sold during the period is considered a(n) _______ (asset/expense/liability) and reported on the ____________ (balance sheet/income statement). Multiple choice question. expense -> income statement -> asset -> balance sheet expense -> balance sheet -> asset -> income statement asset -> income statement -> expense -> balance sheet asset -> balance sheet -> expense -> income statement
Answers
Answer:
asset -> balance sheet -> expense -> income statement
Explanation:
The merchandise inventory that still available for the sale purpose should be treated as the asset and the same should be reported on the balance sheet. And, the merchandise that is sold so it is treated as an expense and the same should be reported on the income statement
Therefore the above answer should be considered
Have a great day everybody
Answers
Answer:
Thanks. Have a great day!
Explanation:
You deserve to.
Answer:
i will thank you and you too :)
Explanation:
The best example of a company that emphasizes share price appreciation as opposed to short term profits or dividends is:
a. Amazon.com
b. P&G
c. WalMart
d. General Motors
Answers
The best example of a company that emphasizes share price appreciation as opposed to short term profits or dividends would be Amazon.com. Amazon.com is known for its focus on growth and long-term goals, rather than short-term profits.
This is evident in the company's consistent reinvestment in its business operations, innovation and expansion, rather than paying out dividends to shareholders.
Amazon.com's CEO, Jeff Bezos, has a famously long-term perspective, and his focus on investing in the company's future has resulted in significant share price appreciation over time. This approach has allowed the company to stay ahead of competitors and remain a leader in the e-commerce industry.
On the other hand, companies such as P&G, WalMart, and General Motors are more traditional in their approach to maximizing shareholder value. These companies tend to focus more on generating short-term profits and paying out dividends to shareholders. While this approach may be effective in the short-term, it may limit their ability to invest in innovation and growth, which could ultimately impact their long-term success.
Overall, Amazon.com's focus on share price appreciation is a unique approach that has allowed the company to achieve sustained growth and success over time. While not all companies may be able to replicate this strategy, it serves as a valuable example of the benefits of a long-term perspective and focus on innovation and growth.
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The best example of a company that emphasizes share price appreciation over short-term profits or dividends is a) Amazon.com. Amazon has been known to prioritize long-term growth over short-term gains.
The company reinvests a significant portion of its profits into research and development, expanding its operations, and acquisitions to achieve its goal of dominating the e-commerce market.
Amazon's approach has been successful in increasing the company's market capitalization and share price. The company's investors also seem to agree with this strategy, as they continue to show confidence in Amazon's future prospects, despite the company's lower dividend payouts.
By focusing on share price appreciation, Amazon is able to attract long-term investors who believe in the company's vision and potential for growth, rather than short-term investors who are only interested in immediate gains.
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a(n) is defined by the american marketing association as "a name, term, design, symbol, or any other feature that identifies one seller’s goods or services as distinct from those of other sellers."
Answers
A(n) is a key component of a company's branding strategy, helping to differentiate its offerings from competitors' and leaving a lasting impression on consumers.
A(n) is a term used to describe any element that sets apart the products or services of one seller from those of others, according to the American Marketing Association. It encompasses a wide range of identifiers, including names, terms, designs, symbols, or any other distinctive features.
One example of a(n) is the Nike "swoosh" logo. This symbol instantly distinguishes Nike's products from those of other athletic apparel brands. Another example is the Coca-Cola brand name. It differentiates Coca-Cola's beverages from other soda companies.
Overall, a(n) serves as a tool for companies to create a unique identity and establish brand recognition in the marketplace. By developing a recognizable and memorable a(n), companies can effectively communicate their values, establish credibility, and foster customer loyalty.
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In advertising regulation, the corrective measures of cease-and-desist orders, corrective ads, and fines are intended to keep advertising honest, keep competition fair, and to protect the public.
Answers
A cease-and-desist order is an order issued by a regulatory body, such as the Federal Trade Commission (FTC) or the Advertising Standards Authority (ASA), to stop a company from engaging in an illegal or deceptive practice.
What is Commission?Commission is a fee paid to a person or business in exchange for providing a service or executing a transaction. It is typically a percentage of the total sale or transaction amount, and is most commonly paid by the seller. Commission can be earned in a variety of industries, including sales, insurance, real estate, banking, and marketing. Most commonly, commission is earned when a salesperson successfully sells a product or service to a customer. Commission can also be paid for services such as recruiting, consulting, or finding a customer for a business.
This type of action is usually taken when a company has been found to have used false or misleading advertising. Corrective ads are ads that are placed to correct a false or misleading statement that was previously made by a company in an advertisement. Fines are penalties that are imposed by a regulatory body on a company for engaging in illegal or deceptive practices.
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what is required to form an agency relationship? the principal must pay the agent. the agent must have contractual capacity. the agent and principal must agree to enter the relationship. the agency agreement must be in writing.
Answers
The agent and principal must agree to enter the relationship required to form an agency relationship. The correct option is C.
What is the formation of an agency relationship?To recap, an agency relationship is created between two parties when one, the agent, agrees to represent the other, the principal. A principal-agent friendship is fiduciary in nature, which means it is built on trust.
To establish an agency relationship, both parties must express their consent. This manifestation can be either verbal or written.
Thus, the ideal selection is option C.
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please help me ASAP
i will give brainliest
Answers
Answer:
d
Explanation:
The equation of any straight line, called a linear equation, can be written as: y = mx + b, where m is the slope of the line and b is the y-intercept. The y-intercept of this line is the value of y at the point where the line crosses the y axis.
which of the following is the best statement about how the amount of the net public debt that a typical individual owes to the holders of the debt has varied in the recent past?
a. The amount has increased tremendously since 2000.
b. The amount has had a lot of ups and downs over time, but it is about the same as in 1970.
c. The amount has held pretty steady over time.
d. The amount has steadily decreased over time.
Answers
The amount has held pretty steady over time is the best statement about how the amount of the net public debt that a typical individual owes to the holders of the debt has varied in the recent past. Option C is the correct answer.
The stock of a certain set of government obligations minus the stock of a particular set of financial assets held by the government can be used to define net government debt in general terms. Governmental commitments, particularly those represented by securities, to pay holders of said securities certain amounts at a later date.
It lists the key advantages and possible disadvantages of each of the measures discussed and seeks to suggest a provisional definition of net government debt that may be used as a standardized extra indicator for analyzing the financial circumstances of EU governments. By deducting a government's financial assets from its gross debt, net public debt is determined.
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The act that prohibits hacking, the use of cookies, creating viruses, or using click-stream data to obtain personal
information about individual computers that surf the Web:
Answers
Answer:
ECPA
Explanation:
The Electronic Communications Privacy Act prohibits all of those things specifically, according to the Business Law Edge lesson.
true or false, employees who work for wages are paid a fixed amount per week
Answers
Discuss between quality control and quality assurance
Answers
Explanation:
Quality control and quality assurance are two essential concepts in the field of product and service quality management.
Quality control refers to the set of measures taken to ensure that the final product or service meets the required standards of quality. It is a reactive approach that involves detecting and correcting defects in the product or service during or after production. Quality control is concerned with the inspection, testing, and sampling of products or services to ensure they meet the pre-established quality standards. It mainly involves the measurement of product or service attributes and comparing them to the desired levels.
On the other hand, quality assurance is a proactive approach that focuses on preventing defects before they occur. It is a systematic and comprehensive process that involves developing and implementing standards, procedures, and policies to ensure that the product or service meets the required level of quality. Quality assurance focuses on the entire production process, from the planning and design stage to the final product or service delivery. It involves continuous monitoring of the production process, identifying areas that may cause defects, and implementing corrective actions to prevent them from happening.
In summary, quality control is concerned with detecting and correcting defects in the product or service, while quality assurance is focused on preventing defects from occurring in the first place by implementing effective processes and procedures. Both approaches are critical in ensuring that products and services meet the required level of quality and customer satisfaction.
A restaurant that serves $1400 a day in meals to 140 customers with an average cost of goods sold per unit at $7.00.
What is the average unit of sale for this business?
Answers
Answer:
=$10
Explanation:
The average unit of sales will the total serves per day divided by the total number of customers.
= $1400/140
=$10
The average unit of sale is $10