Answer:
1. What is the TYM? 7.64%
2. What is the YTC?: 7.36%
3. 3. If interest rates are expected to remain constant, what is the best estimate of the remaining life left for RTE Incs bonds? : 8 yrs
As the YTC is lower than YTM the company will purchase the bonds
4. If RTE issued new bonds today, what coupon rate must have to be issued at par? 7.64%
The bonds will need to be issued at market to be at par.
Explanation:
We solve for the YTM and YTC considering they are the sum of the coupon payment and maturity or call price which maches the current market price:
YTM
C 90.000
time 18
rate 0.076433667
PV $864.7491
Maturity 1,000.00
time 18.00
rate 0.076433667
PV 265.60
PV c $864.7491
PV m $265.6006
Total $1,130.3497
YTC
C 90.000
time 8
rate 0.073634141
PV $529.9297
Maturity 1,060.00
time 8.00
rate 0.073634141
PV 600.42
PV c $529.9297
PV m $600.4203
Total $1,130.3500
Answer: 22%
Explanation:
Compound interest at 20% per year for 2 years is;
= (1 + 20%)² - 1
= 1.44 - 1
= 44%
The simple interest in 2 years will also be 44% for it to be equivalent.
For the yearly simple interest rate simply divide by 2 because simple interest does not get compounded.
= 44%/2
= 22%
Answer:
0.31
Explanation:
current stock price $70
risk free rate = 6%
standard deviation = 40$
30 day call option $75
the simplest way to calculate delta (or stock position) is to use a scientific calculator, but if you want you can also do it manually:
delta = N(d₁) ⇒ cumulative normal distribution probability at d₁
with d₁ = [ln (S/K) + (r2 + σ
²/2)T] / σ√T
Answer:
Lubrication
Explanation:
Based on the information provided within the question it can be said that this is an example of the business term known as Lubrication. This is a form of bribery where an individual or company gives a certain amount of money (usually a relatively small amount) to personnel of a business in order to speed up a certain tasks and facilitate the process that needs to be completed. Which is what is happening in this situation, the company gave $500 to the customs officials to clear the containers faster.
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