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3 years ago

An investor must choose between two bonds:

Business

1 answer:

Furkat [3]3 years ago

7 0

Answer:

a. Compute the current yield on both bonds.

Current yield = Annual coupon payment / current market price of bond

Bond A current yield = $80 / $800 = 0.1

Bond B current yield = $85 / $900 = 0.09

b. Which bond should he select based on your answer to part a?

Bond A, because it has a higher current yield.

What is the approximate yield to maturity on Bond B?

Approximate Yield to Maturity (YTM) = [C+ (F-P) / n] / [(F+P) / 2]

Where:

C = Coupon payment

F = Face value

P = Price

n = years to maturity

Because the face value is not specified in the question, we will assume is the same as the price.

Bond B YTM = [85 + (900-900) / 2] / [(900+900) / 2]

= 0.09

d. Has your answer changed between parts b and c of this question in terms of which bond to select?

Under the assumption that the price and face value of Bond b are the same, we can see that the YTM and the current yield are the same, so the choice of the bond (bond A) has not changed.

However, if the face value was higher or lower than the price, the YTM would be different to the current yield, for that reason, it is always best to check Yield to Maturity instead of current yield when choosing which bond to invest in.

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William ibbs, a professor at the university of california at berkeley, found that high project management maturity results in __

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William Ibbs, a professor at the university of California at Berkeley, found that high project management maturity results in lower direct costs of project management.

Project management is the process of directing the work of a team to achieve all project goals within given constraints. This information is typically documented in the project documentation created at the beginning of the development process. The main constraints are scope, time and budget.

Project management is the application of processes, methods, skills, knowledge and experience to achieve specific project objectives within agreed parameters and according to project acceptance criteria. Project management has the end result of being constrained by tight time frames and budgets.

Learn more about project management here:brainly.com/question/17310758
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8 0

1 year ago

A firm's database showed that the average value of all inventory items for the year was $7,650. the cost of goods sold was rep

Rainbow [258]

5 weeks
There are 52 weeks per year and since the company closes for 2 weeks per year, that means that the company does business for 50 weeks each year. During that year, the company sold goods that cost $76,500. And the average inventory was $7,650 which is $7,650 / $76,500 = 0.10 = 10% of the goods sold for the entire year. So the average inventory could allow the company to work for 10% of the year. And 10% of 50 is 5. Therefore the company had 5 weeks of supply on average in inventory.

6 0

3 years ago

Indicate what happens to each of the following when the price level decreases:

aleksklad [387]

Answer:

a. Consumption will increase as goods and services are now cheaper for people to buy.

b. Investment increases as people will have more money to invest due to having spent less on consumption.

c. Net exports increases as exports become cheaper due to lower prices in the country. More people outside will therefore demand exports leading to them increasing more than imports.

d. Money Demand - B. There is a movement along the Money Demand curve to the Left

As price has decreased, the amount of money needed to buy goods will decrease which would lead to less demand for money. Money demand curve will show this as a movement to the left of the Money demand curve.

e. The interest rate will decrease because there will be more money to invest as explained above. With more money to invest, loanable funds will b in high supply thereby dropping interest rates.

f. Aggregate expenditure shifts right to show that expenditure has increased from people buying cheaper goods.

g. Aggregate demand - B. AD shifts to the Right.

More people will demand goods and services because they are cheaper.

8 0

3 years ago

Suppose you have $1,000,000 today and starting a year from now you intend to spend this money over the next 30 years. Assume the

elena55 [62]

Explanation:

Here Initial amount = $10,00,000

Nominal Interest Rate = 9.2%

inflation Rate = 5%

Real Interest Rate = 4%

in question it was asked to give in real then we will use the real discount rate to know annual spent amount

Present Value = PMT×PVIFA ( at 4% and 20 years)

Therefore, PMT = Present Value of Cash / PVIFA ( at 4% and 20 years)

= 1000000 / 13.5903

= $73581.75

Where, PMT = Annual Spent Amount

PVIFA = Present Value interest Factor Annuity

7 0

3 years ago

Funds acquired by the firm through retained earnings (similar to their free cash flow), have no cost attached to them, because t

Mariulka [41]

Answer:

False

Explanation:

Retained earnings can be defined as the amount of money or income left after a firm or organization as paid out it dividends to their shareholders.

Retained earnings are also an organisation's profit which they retained or keep and this earning is reinvested for other purposes. Such purposes include: Future expansion of the the organization. Retained earnings are a form of liability to a firm.

Funds acquired by the firm through retained earnings (similar to their free cash flow), have cost attached to them. This is because the cost of retained earnings is equivalent to rate of return on re-investment of dividends of shareholders that is paid by the organization. Hence, retained earnings is equivalent to the cost of equity.

3 0

3 years ago