All categories

2 years ago

If the effective annual yield on a bond is equal to the bondʹs coupon rate, the bond will have a market value that is

1 answer:

5 0

If the effective annual yield on a bond is equal to the bondʹs coupon rate, the bond will have a market value that is equal to the principal value of the bond. Option B. This is further explained below.

Generally, a Bond is simply defined as fixed-income investments such as bonds that reflect a loan from an investor to a borrower, often a corporation or the government.

In conclusion, In this case, the bond's market value will be equal to the principal value of the bond. if the bond's effective yearly yield is equal to the bond's coupon rate

You might be interested in

Alternative A Alternative B Materials costs $28,000 $64,000 Processing costs $34,000 $34,000 Equipment rental $11,000 $28,500 Oc

stira [4]

Answer:

$61,600

Explanation:

The differential cost analysis is an analysis in which the costs of two alternatives is taken into consideration and based on those costs it is decided that which alternative is suitable in terms of increment that has been lost by other alternative. That is why it is also known as alternative cost. To calculate the differential cost, it is simple, subtract the cost of 1st alternative from the 2nd and you will get the differential cost. Basically this tool helps in decision making when deciding to choose between two alternatives.

In the question we have been asked to find the differential cost of Alternative B over Alternative A, including all of the relevant costs. To do that first we need to find the differential costs among all the relevant costs and then sum all the differences to find the differential cost of Alternative B over Alternative A.

(a)

Differential Cost of Alternative B over Alternative A is;

Materials costs = $64,000 - $28,000 = $36,000

Processing costs = $34,000 - $34,000 = $0

Equipment rental = $28,500 - $11,000 = $17,500

Occupancy costs = $27,600 - $19,500 = $8,100

(b)

Now the Total Cost which is Differential Cost of Alternative B over Alternative A is;

$36,000 + $0 + $17,500 + $8,100

$61,600

6 0

3 years ago

Assume a major investment service has just given Oasis Electronics its highest investment rating, along with a strong buy recomm

ruslelena [56]

Answer:

Share price : $ 56.23

Explanation:

CAPM

$Ke= r_f + \beta (r_m-r_f)$

risk free = 0.05

market rate = 0.11

premium market = (market rate - risk free) 0.06

beta(non diversifiable risk) = 1.64

$Ke= 0.05 + 1.64 (0.06)$

Ke 0.14840

Now, we solve for the present value of the future dividends:

year dividend* present value**

1 2.91 2.53

2 3.31 2.51

3 3.78 2.49

4 4.31 2.48

4 80.38 46.22

TOTAL 56.23

*Dividends will be calculate as the previous year dividends tiems the grow rate

during the first four year is 14%

then, we calcualte the present value of all the future dividends growing at 9% using the dividend grow model:

$\frac{D_1}{K_e-g}$

(4.31 x 1.09) / (0.1484 - 0.09) = 80.38

Then we discount eahc using the present value of a lump sum:

$\frac{Cashflow}{(1 + rate)^{time} } = PV$

We discount using the CAPM COst of Capital of 14.84%

last we add them all to get the share price: $ 56.23

4 0

3 years ago

Which of these is a good?

Llana [10]

Explanation:

Option A: A fancy hair cut option is given but it is not associated with any of the price. So we cannot say it is good or worth for the money.

Option B: It seems to be valid. But when we consider all the given options, there are better options than this.

Option C: Rusted means a brown layer formed on the body of the car. So we cannot say it is good. So this option too is invalid.

Option D: Normally car wash costs $10. It is worth to do a complete car wash with $4.00. This option is the best choice.

4 0

3 years ago

If real gross domestic product (GDP) grew by 2 percent and the inflation rate was 2 percent, then nominal GDP grew by

ohaa [14]

Answer:

Explanation:

If the real gross domestic product for the year grew by 2%

The inflation rate also grew by 2%

Then nominal GDP rate can be calculated as follows

= Real GDP + inflation rate

= 2% + 2%

= 4%

Hence the nominal gross domestic product grew by 4%

6 0

3 years ago

What does the word speculation mean to an economist? investing in low-risk stocks with surplus money investing in a type of stoc

Eddi Din [679]

The correct answer among the choices given is the third option. Speculation would mean to an economist as making high-risk investments with borrowed money. It is the purchase of something hoping for it to be more valuable at a certain time.

3 0

3 years ago

Read 2 more answers