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lys-0071 [83]
2 years ago
14

7. Valuing semiannual coupon bonds Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual paymen

ts, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with five years to maturity has a coupon rate of 6%. The yield to maturity (YTM) of the bond is 9.90%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $849,059.88 $721,700.90 $534,907.72 $1,018,871.86 Based on your calculations and understanding of semiannual coupon bonds, complete the following statement: The T-note described in this problem is selling at a .
Business
1 answer:
Art [367]2 years ago
7 0

The value of the Treasury note is $849,059.88 and this is selling at a discount.

The value of a treasury note depends on different factors such as:

  • The initial value
  • The coupon rate
  • The value of the yield to maturity

Considering these aspects, let's calculate the value of the treasury note

Initial value: $1,000,000

$1,000,000 x 6% (coupon rate) =  $60,000

$60,000 / 2 (the coupon pays twice a year) = $30,000 - This value refers to the payment per period

Let's consider now the number of periods and the yield to maturity

Number of periods: 5 x 2 (the number of periods double) = 10 periods

Yield to maturity or rate: 9.90% / 2 (cash flow decreases by half) = 4.95%

Finally, you can use the PV formula to calculate the value:

PV (4.95%,10,-30000,-1000000) - This part is done in excel program as the original formula is quite complex

PV =$849,059.88

Based on this, the value of the note is $849,059.88, and you can conclude this is selling at a discount because this value is lower than the initial value of 1,000,000.

Learn more in: brainly.com/question/12881737

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Carla's business recently suffered an attack that shut down operations. What planning document describes how her business should
Kruka [31]

Answer:

A business continuity document

Explanation:

A business continuity plan document helps protect a business from the impact of potential crises that may affect their operations.

It is very important for small businesses to have this written document.

Carla's business continuity plan document should detail:

1. the key business functions needed to get operating as quickly as possible and the resources needed to do so if there's an attack.

2. identify potential crises that might affect the business and also determine how to minimise the risks of these disasters occurring.

Since training has been given to staffs before about their responsibilities in an emergency situation, they should apply what they've learnt.

For example, if there's a possibility for an attack that may affect power supply, Carla should put a back-up generator in place, in the event of a failure.

5 0
3 years ago
A shortage of qualified personnel is one of the main reason that companies outsource. A project may require experts in a particu
k0ka [10]

Answer: Access to specific skills

Explanation: The benefit of outsourcing that the company is getting in the given example is that the company could get access to experts in the particular jobs that are important for a project.

By outsourcing certain jobs, expert knowledge can be used to operate business with the additional benefit of hundred percent focus.

7 0
3 years ago
Upton Co. is growing quickly. Dividends are expected to grow at 20 percent for the next three years, with the growth rate fallin
nikdorinn [45]

Answer:

$71.03

Explanation:

To find the current share price we need to find the value of future dividends first and then discount it by the given rate of return

DATA

Growth rate = g = 20%

Time period = 3 years

Required return = 11%

Current dividend = Do = $1.45

Share price =?

Solution

Future dividend = Current dividend ( 1 + growth rate)

D1 = (1.45 x 1.20) = $1.74

D2 = (1.74 x 1.20) = $2.088

D3 = (2.088 x 1.20) = $2.5056

Value after year 3 = (D3 x Growth rate) / (Required return-Growth rate)

Value after year 3 = (2.5056*1.08) / (0.11-0.08)

Value after year 3 =$90.2

current share price = Future dividends x Present value of discounting factor

current share price = (1.74/1.11)+($2.088/1.11^2)+(2.5056/1.11^3)+($90.2/1.11^3)

current share price =  1.56 + 1.69 + 1.83 + 65.95

current share price =$71.03

6 0
3 years ago
Ryan receives a coupon on his iphone advising him about the location of a taco bell store. this is an example of which requireme
sasho [114]

Ryan receives a coupon on his iPhone advising him about the location of a taco bell store. this is an example of which required for marketing to occur a way for parties to communicate.

Advertising and marketing refer to activities a company undertakes to promote the shopping for or selling of a product or service. Advertising includes advertising, promoting, and turning in merchandise to purchasers or different businesses. Some advertising is completed by using associates on behalf of an organization.

Advertising is the method of exploring, creating, and turning in value to meet the desires of a goal market in terms of products and offerings; doubtlessly along with a choice of a target audience; choice.

Marketing is the pastime, set of establishments, and approaches for growing, communicating, turning in, and changing offerings which have fees for customers, clients, partners, and society at massive.

Learn more about marketing here brainly.com/question/25640993

#SPJ4

8 0
1 year ago
Henri owned a company that made gourmet cookies in New York. The chocolate he used was made in Belgium. The pecans he used were
ValentinkaMS [17]
Mmmmmmmmmmmmmmmmmmmmmmmm
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2 years ago
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