On January 1 2016, Natually Good Products issued $900,000 par value, 7%, five year bonds. Interest is payable semiannually at the end of the period. The market rate of interest on the date of the bond issue was 6%. The company's fiscal year ends on dec 31.

a) Determine issue price of debt.

b) Prepare Journal entry Record issuance of bonds payable. Record first semiannual interest payment. Record payment of the bonds at maturity.

Now, Prepare the journal entry to record the early retirement of the bonds at the end of the third year 2018 for 959,000

Below is a list of prices for zero-coupon bonds of various maturities.

a. A 4.8% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Round your answer to 2 decimal places.)

b. If at the end of the first year the yield curve flattens out at 8.4%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.)

A firm issues its 5-year, 9%, $200,000 Par value bond. The market rate is 12%. The company uses the straight-line method to amortize bond premiums and discounts.  The bonds pay interest semi-annually.

Present Value Factor: 6%,  n=10

Annuity Present value factor is 7.36009

Single sum Present value factor is  0.55839

What is the bond price?

Record the sale of the bond

Record the first interest payment

Record the second interest payment  

Record the final payment of the Face Value

Prepare the amortization table

1. The optimal solution of the linear programming problem is at the intersection of constraints 1 and 2.

Please answer the following questions by using graphical sensitivity analysis.

Max 2x₁ + x₂

s.t. 4x₁ +1x₂ ≤8

4x₁ +3x₂ ≤12

  1x₁ +2x₂ ≤6

x₁ , x₂ ≥ 0

A. Over what range can the coefficient of x₁ vary before the current solution is no longer optimal?

B. Over what range can the coefficient of x₂ vary before the current solution is no longer optimal?

C. Compute the dual price for the first constraint.

1. Research Questions:
   1. Mortgage-backed securities may have negative convexity which cushions the increase in price when interest rates decline. Explain the reason.
   2. Callable bonds may have negative convexity. Explain the reason.
   3. Positive convexity is said to be working in the investor’s favor. Explain the reason.
   4. What features of a bond affects its convexity? Explain clearly.
   5. What does “bond ladder” mean in the context of fixed-income portfolio management? What is the purpose of “bond laddering”?
   6. The practitioners also call duration as the “first derivative”. Why?

Suppose that the pharmaceutical company Abstergo Industries successfully develops the first successful vaccine for COVID-19. If the United States government implements regulation that requires Abstergo to sell vaccine doses at marginal cost (rather than charging a higher price as it otherwise would), this will reduce Abstergo’s profit from the vaccine by $12 billion and increase the well-being of vaccine consumers by $17 billion, creating an overall efficiency gain of $5 billion. Explain why this regulation would not result in a Pareto superior outcome even though it would lead to an efficiency gain.

1. a. We are analyzing the market for a particular good and are given the following equations for demand and supply: P=10-Q and P=Q-4. First, determine the equilibrium price and quantity in this market.

b. Suppose the government wants to create a disincentive for the consumption of this good by placing a tax on the good in the amount of $1. How much less will be sold? How much will the buyer pay and how much will the seller get?

c. How much different would the outcomes be if the tax was instead a subsidy (you can assume a subsidy in the same amount -- $1)? When would a subsidy be used?

An investment pays $2,500 per year for the first 4 years, $5,000 per year for the next 3 years, and $7,500 per year the following 9 years (all payments are at the end of each year). If the discount rate is 11.85% compounding quarterly, what is the fair price of this investment?

Work with 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.

Group of answer choices

$31,750.35

$33,694.25

$26,566.62

$39,201.97

$32,398.32

An investment pays $1,950 per year for the first 5 years, $3,900 per year for the next 6 years, and $5,850 per year the following 10 years (all payments are at the end of each year). If the discount rate is 10.95% compounding quarterly, what is the fair price of this investment?

Work with 4 decimal places and round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.

Group of answer choices

$22,643.73

$26,956.82

$28,574.23

$23,182.86

$25,608.98