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2 years ago

oas on a callable bond is 75 basis points using on-the-run treasuries as benchmark rates. which is correct?

1 answer:

4 0

The correct statement is option C. OAS reflects the credit risk and liquidity risk of the bond over the treasury benchmark rates. Read below about a callable bond.

<h3>What is a callable bond?</h3>

A callable bond is a type of bond that permits the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity. Consequently, the said point which is basis is 75.

Therefore, the correct answer is option C. OAS reflects the credit risk and liquidity risk of the bond over the treasury benchmark rates.

learn more about callable bond: brainly.com/question/24129882

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Its investment bankers have told Donner Corporation that it can issue a 25-year, 8.1% annual payment bond at par. They also stat

Nadya [2.5K]

The coupon rate must be set at 9.77%

The after-tax return on the bonds is:

= Annual payment rate * ( 1 - tax rate)

= 8.1% * ( 1 - 40%)

= 4.86%

The investors would like an after-tax return on preferred stock that is more than their bond return by 1% so they would like a preferred return of:

= 4.86% + 1%

= 5.86%

If the Preferred must be issued at par, its coupon rate must be equal its before-tax yield:

= After tax yield / ( 1 - tax rate)

= 5.86% / ( 1 - 40%)

= 9.77%

<em>More on this type of question can be found at brainly.com/question/17126608</em>

8 0

3 years ago

B) Suppose that regular raises at your job allow you to increase your annual payment by 5% each year. For simplicity, assume thi

iren2701 [21]

Answer:

Time period required to pay off the mortgage = 18 years

Explanation:

Note: This question is incomplete and lacks necessary data to solve. But I have found that necessary data on the internet, which I have written down and solved the question accordingly.

Data Missing:

Buying Cost of House = $320000

Interest rate = 7%

Annual Mortgage Payment = $25525.8

Now, we are required to calculate the time period required to pay off the mortgage.

Solution:

Data Given:

Increase in annual payment percentage = 5%

So,

Formula:

P = C $e^{A-i}$ + C $e^{2(A-i)}$ + C $e^{3(A-i)}$ + ........ + C $e^{n(A-i)}$

Where,

P = Buying Cost of House = $320000

i = interest rate = 7% = 0.07

A = Increase in annual payment percentage = 5% = 0.05

C = Annual Mortgage Payment = $25525.8

P = C $e^{A-i}$ + C $e^{2(A-i)}$ + C $e^{3(A-i)}$ + ........ + C $e^{n(A-i)}$

In this formula, we have all the required things expect the value of n, which we have to calculate.

n = Time period required to pay the mortgage.

So,

$320000 = 25525.8 $e^{0.05 - 0.07}$ + 25525.8 $e^{2(0.05 - 0.07)}$ + 25525.8 $e^{3(0.05 - 0.07)}$ + ..... + 25525.8 $e^{n(0.05 - 0.07)}$

Taking 25525.8 common,

320000 = 25525.8 ( $e^{-0.02}$ + $e^{-0.04}$ + $e^{-0.06}$ + .... + $e^{-0.02n}$ )

320000/25525.8 = ( $e^{-0.02}$ + $e^{-0.04}$ + $e^{-0.06}$ + .... + $e^{-0.02n}$ )

12.536 = ( $e^{-0.02}$ + $e^{-0.04}$ + $e^{-0.06}$ + .... + $e^{-0.02n}$ )

Taking e common:

12.536 = $e^{-0.02 -0.04 - 0.06 + .... -0.02n}$

Taking Ln to solve for n, we get:

n = 17.89

n ≈ 18

n = 18 years

Hence, Time period required to pay off the mortgage = 18 years

8 0

3 years ago

You plan to participate in an educational event sponsored by a large regional health care system. One of your colleagues suggest

nexus9112 [7]

My response to my colleague would be a "No" because the participation in an educational event may not include a sales presentation.

<h3>What is an educational event?</h3>

In the health system, these are event that are designed to inform health beneficiaries about the different health packages, plans etc.

Hence, the suggestion of my colleague will not be taken because the intial record of my presentation in the educational event will not include a sales promotion.

Therefore, the Option A is correct.

Missing options <em>"a. You should tell your colleague no because participation in an educational event may not include a sales presentation. b. As long as your sales presentation includes information that is about healthy living or clinically effective screening exams, you could talk about the Medicare plans in your presentation. c. You should tell your colleague no, because marketing.</em>