(a) What are the current yield on a three-year bond whose face value is $1000 with a coupon rate of 6% per year and a price of $900? (1) 6.00% (2)6.67% (3) 10.00% (4) 10.02% (5) 11.11 % (b) What are the yield to maturity on a three-year bond whose face value is $1000 with a coupon rate of 6% per year and a price of $900? (1) 6.00% (2)6.67% (3) 10.00% (4) 10.02% (5) 11.11 % (c) Given the above yield to maturity, what would be the price on a two-year coupon bond whose face value is $1000 with a coupon rate of 4% per year? Choose the closest price. (1) $944 (2) $954 (3) $964 (4) $974 (5) $984 (d) What would be the yield to maturity on a two-year coupon bond whose face value is $1000 with a coupon rate of 4% per year?Choose the closest percentage. (1) 5.56% (2)5.76% (3) 5.96% (4)6.16% (5) 6.36 % (e) A stock is expected to pay a dividend of $2 per share a year from now, and its dividends are expected to grow by 6% per year thereafter. If its price is now $20 per share, what must be the market capitalization rate? (1) 16.0% (2)18.0% (3) 20.0% (4) 22.0% (5) 24.0 %
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
what is the answer to question (c)?
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