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fomenos
3 years ago
14

Meacham Enterprises' bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15

-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)
Business
1 answer:
Flauer [41]3 years ago
7 0

Answer:

Yield to call (YTC) = 7.64%

Explanation:

Yield to call (YTC) = {coupon + [(call price - market price)/n]} / [(call price + market price)/2]

YTC = {135 + [(1,050 - 1,280)/5]} / [(1,050 + 1,280)/2]

YTC = 89 / 1,165 = 0.07639 = 7.64%

Yield to call is how much a bondholder will earn if the bond is actually called, and it may differ from yield to maturity since the call price is generally higher than the face value, but the yield to maturity generally is longer than the call period.

You might be interested in
Securitization, the process of forming new securities by bundling or slicing up groups of securities like mortgages and bonds, i
maw [93]

Answer:

The correct answer is letter "A": a way of reducing risk through diversification.

Explanation:

Securitization is the process of converting an asset or group of assets into a marketable security. Often, the securitized assets are divided into different layers tailored to the<em> investment risk tolerance</em> of different types of investors. The process of securitization creates liquidity in the marketplace for the assets being securitized.

6 0
3 years ago
What are the portfolio weights for a portfolio that has 134 shares of Stock A that sell for $44 per share and 114 shares of Stoc
Viefleur [7K]

Answer:

Weight of stock A = 60.33%

Weight of stock B= 39.66%

Explanation:

Stock A has 134 shares that is sold at $44

Stock B has 114 shares that is sold at $34

The total market value of stock A can be calculated as follows

= 134×44

= 5,896

The total market value of stock B can be calculated as follows

= 114×34

= 3,876

Total value of both stocks = 5,896+3,876

= 9,772

Therefore the weights of the portfolio can be calculated as follows

Weight of stock A = 5896/9772

= 0.603×100

= 60.33%

Weight of stock B

= 3876/9772

= 0.3966×100

= 39.66%

5 0
3 years ago
The Conner Company uses a two-step process for making wooden boards with holes in them. Step 1 is drilling and Step 2 is sanding
Travka [436]

The maximum output from Step 1 using the hand drill is 2 units per hour (option C).

To know how many boards of wood can be made in a given time using the manual drill that takes 2 minutes making each hole and 2 minutes loading, the following operations must be done.

Multiply the number of holes in each table by the amount of time it takes the drill to drill each hole.

  • 14 × 2min = 28min

Add the time it takes for the drill to make the total holes to the two minutes it takes to load.

  • 28min + 2min = 30min

According to the above, each table takes 30 minutes to complete. So the correct answer is 2 units per hour (option C).

This question is incomplete because the options are missing. Here are the options.

A) 10 units per hour

B) 5 units per hour

C) 2 units per hour

D) 12 units per hour

E) None of the above

Learn more in: brainly.com/question/25179484

8 0
3 years ago
Adams, Inc. has sales of $100,000 with a contribution margin of $60,000 and net income of $20,000. Baron, Inc. has sales of $110
Morgarella [4.7K]

The true statement is that Adams has a higher degree of operating leverage than Baron.

<h3>What is a operating leverage?</h3>

The  cost-accounting formula is used to measures the degree a project can increase the operating income by increasing revenue.

Here, the degree of operating leverage is for Adams, Inc is <u>3</u> and for Baron, Inc. is 2.

Hence, the true statement is that Adams has a higher degree of operating leverage than Baron.

Therefore, the Option C is correct.

Read more about operating leverage

<em>brainly.com/question/15869128</em>

7 0
2 years ago
For a conventional, conforming loan, the borrower is making a down payment of 12%. The seller wishes to contribute to closing co
maxonik [38]

In such a scenario, the most the seller can contribute to the closing costs is up to<u> 6%. </u>

<h3>When can seller contribute to closing costs?</h3>
  • The borrower must make a down payment of an amount between 10% and 24.9%.
  • The loan must be conforming.

As the down payment of 12% falls within the 10% and 24.9% range, the seller can make a contribution of up to 6% should they please.

In conclusion, they can contribute 6%.

Find out more on conventional loans at brainly.com/question/1130069.

5 0
3 years ago
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