1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
steposvetlana [31]
3 years ago
13

RJR Nabisco recently experienced a market reevaluation due to a number of tobacco lawsuits. The firm has a bond outstanding with

15 years to maturity, and a coupon rate of 8%, with interest being paid semiannually. The required yield to maturity has risen to 16%. What is the price of the RJR Nabisco bond?
Business
1 answer:
vova2212 [387]3 years ago
6 0

Answer: The current price of the bond is $258.74

Explanation:

The present value of the bond is its Current Price

We would use the following formua to calculate the Current Price of the bond,

PV = \frac{FV}{(1+r)^{N} } + A [\frac{1-\frac{1}{(1+r)^{N} } }{r} ]

Where,

FV = Face value =  $1,000

A = Coupon payment paid semi annually = (8% x 1000) / 2 = $40

r = Yield to Maturity = 16%

N = Number of periods = 15 years x 2 = 30 semi-annual periods

PV = \frac{1000}{(1+0.16)^{30} } + 40 [\frac{1-\frac{1}{(1+0.16)^{30} } }{0.16} ]

PV = 258.73618

You might be interested in
What causes cost-push inflation
aleksandr82 [10.1K]

Answer: Cost-push inflation is caused by an increase in the prices of the underlying inputs of production.

5 0
3 years ago
True or False<br> The real GNP, divided by our country's population, gives us the per capita GNP
NNADVOKAT [17]

I would say it’s true because it does have some facts in it

6 0
3 years ago
What is the relationship between the alpha level, the size of the critical region, and the risk of a type i error?
quester [9]
Alpha level is a probability value that is used to define the concept of "very unlikely" in a hypothesis. This value determines he boundaries for the critical region, which is composed of the extreme sample values that are very unlikely to be obtained if the null hypothesis is true. Type I error is <span>when a researcher rejects a true null hypothesis.</span>
The relationship between the alpha level, the size of the critical region, and the risk of a type i error is the following: when the alpha level increases, the critical region increases and type I error increases.
4 0
4 years ago
If generalization is observed when the independent variable is introduced to the first baseline in the multiple baseline design,
MrRa [10]
The best answer that completes the statement above is this: CHANGING CRITERION DESIGN.
This question is based on the use of a double-blind study. When we say double-blind study, from the term itself double-blind, it means that neither the experimenters nor the sample or participants are going to receive the treatment of the said experiment. This kind of study is typically used in order to remove bias in the research results. Hope this helps.
3 0
4 years ago
The decision to innovate
sukhopar [10]

Answer:

D hope that helps you out

7 0
3 years ago
Other questions:
  • Suppose it is decided that rent control in New York City will be abolished and that market rents will now prevail. Assume that a
    7·1 answer
  • (1) : (2) : (3)DI - C : DI - C : DI - C$0 - $4 : $0 - $65 : $0 - $210 - 11 : 80 - 125 : 20 - 2020 - 18 : 160 - 185 : 40 - 3830 -
    7·1 answer
  • Shuai is writing a report with a great deal of complicated numerical information. to clarify and simplify this information for d
    9·1 answer
  • Rimary marketing research is more expensive than secondary market research
    5·1 answer
  • The selling price of houses would be most likely to decrease if there were first a decrease in which of the following? A. New-ho
    12·2 answers
  • Assume the firm’s dividend payment is $0.18, and that the required rate of return for the firm’s industry is 10.1%. What is the
    7·1 answer
  • Suppose a stock had an initial price of $50 per share, paid a dividend of $.80 per share during the year, and had an ending shar
    10·1 answer
  • Measuring performance relative to planned objectives and standards is part of:.
    10·1 answer
  • In which situation would a savings account be the be investment to earn interest
    13·1 answer
  • Explain corporate bond interest in terms of cost of capital versus investor yields. also, explain the municipal bond interest in
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!