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lakkis [162]
3 years ago
12

9. Suppose an investor has two choices:Choice 1: invest in a Bond A which is a 2-year bond with an interest rate of 12% Choice B

: two 1-year bonds with sequential interest payment of 10% and 14%?Which Choice would produce a greater return if the pure expectations theory was to hold true. *
A) Choice A
B) Choice B
C) Both of the choices would produce the same return
D) We can’t tell.
Business
1 answer:
statuscvo [17]3 years ago
6 0

Answer:

the answer is (C) both of the choices would produce the same return

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Answer:

Bond price= $1,210.4

Explanation:

Giving the following information:

Coupon rate= 0.079/2= 0.0395

YTM= 0.056/2= 0.028

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n= 13*2= 26

<u>To calculate the price of the bond, we need to use the following formula:</u>

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond price= 39.5*{[1 - (1.028^-26)]/0.028} + [1,000 / 1.028^26]

Bond price= 722.67 + 487.73

Bond price= $1,210.4

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Explanation:

  • Wanda's philosophy about becoming a distributer of enhance performance resulted in increased market demand due to consumer perception that her goods are stronger and therefore more advantageous.
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(b) Statue of frauds

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Gross profit equals the difference between sales revenue and cost of goods sold plus operating expenses. net income and operatin
juin [17]

Answer:

Gross profit equals the difference between sales revenue and cost of goods sold.

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