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lesantik [10]
1 year ago
10

a perpetual bond with a par value of $1,000 and a semiannual coupon has a yield to maturity of 5.20% and a current price of $1,0

55. what is its current yield?
Business
1 answer:
ycow [4]1 year ago
4 0

Rate = 5.2% / 2 = 2.6%

Price = Semi annual coupon / Yield

1,055 = Semi annual coupon / 0.026

Semi annual coupon = 27.43

Annual coupon = 27.43 * 2 = 54.86

Current yield = (Coupon / price) * 100

Current yield = (54.86 / 1,055) * 100

Current yield = 5.20%

A perpetual bond, also regarded colloquially as a perpetual or perp, is a bond without a maturity date, consequently allowing it to be handled as equity, not as debt. Issuers pay coupons on perpetual bonds all the time, and they no longer ought to redeem the most important. Perpetual bond coin flows are, consequently, the ones of perpetuity.

A perpetual bond is a bond not using a maturity date that isn't always redeemable however can pay a regular circulate of interest for all time.

Maturity or maturity date is the date on which the very last fee is due on a loan or other financial device, consisting of a bond or term deposit, at which factor the major is because of being paid. Most devices have a hard and fast maturity date which is a particular date on which the device matures.

Learn more about Perpetual bonds here: brainly.com/question/14685796

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B) $12,825

Explanation:

In order to calculate the worst case scenario of sales first we need to calculate the worst case for sales of units.

The Company estimates that 5,000 units will be sold with a 10 percent plus-or-minus range. So, let calculate the worst case for the sale of units, in this case being 90% of the 5,000 unit estimate. Calculate 90% of 5,000, and this gives us 4,500 units as the worst case scenario.

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