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Aneli [31]
2 years ago
11

Calculate the price of a two-year bond with a face value of $100, a coupon rate of 5%, and a yield-to-maturity of 5%.

Business
1 answer:
aalyn [17]2 years ago
6 0

The price of the bond is $100.

The bond's price is the present value of the face value plus the present value of the interest accrued throughout the bond's term.

The coupon interest rate is 5% of 100, that is $5 per year. The yield to maturity is also 5%. Because the coupon rate is equal to the yield, the bond's present value will only be its face value.

Present value = 5(P/A, 5%, 2) + 100(P/F, 5%, 2)

                      = 5×1.85941+ 100×0.90703

                       = 100

Therefore, the price of the bond is $100.

To know more about price of the bond click here:

brainly.com/question/15567868

#SPJ4

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Universal Travel Inc. borrowed $500,000 on November 1, 2013, and signed a 12-month note bearing interest at 6%. Interest is paya
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Answer:

C.$5,000.

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Answer:

It occur where MR = MC

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It is stated as MR = MC.

7 0
2 years ago
the italian airline alitalia will pay $10 million to United Airlines one year from today. The spot rate is $1.35/E, while the 1-
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Answer:

alitalia should do the forward hedge to hedge its transaction exposure

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1. borrow Euro whose present value is equal to the amount to be paid.

2. convert it to foreign currency at the current spot rate.

3. place it in a deposit

4. make the payment when the deposit reaches maturity

PV of payment = 10000000/1.05

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