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Vadim26 [7]
3 years ago
15

Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $89.75, while a 2-year zero sells at $79.88. You

are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 10% per year. a. What is the yield to maturity of the 2-year zero?
Business
1 answer:
Sindrei [870]3 years ago
7 0

Answer:

11.89%

Explanation:

You can use a financial calculator to find the yield to maturity of the 2 year -zero coupon bond. Input the following;

Time to maturity; N= 2

Face value of the bond  ; FV = 100

Annual coupon payments; PMT = 0 (since it's a zero-coupon bond)

Present value or price of the bond; PV = -79.88

Next, compute the annual interest rate; CPT I/Y = 11.89%

Therefore, the yield to maturity of the 2-year zero-coupon  bond is 11.89%

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Jack offers to sell Jill his automobile for $10,000. Jill says she must think about but that she is not rejecting his offer. Jil
wel

Answer:

The sale of the car is canceled

Explanation:

For two reasons I think this. Jack had already sent out a letter to jill stating that the car is no longer for sale. As the current owner of the vechile he has the right at any point in time to draw out of the deal up till the actual signing over of the car.  

3 0
3 years ago
Apple, Dell, Seagate, and other U.S. companies have been criticized for sending manufacturing jobs to other countries to cut dow
Alja [10]

Answer:

offshoring

Explanation:

buisness process from one to another

7 0
3 years ago
An analyst needs to adjust the nominal GDP for the years 2000 and 2010 into real terms to conclude his comparison analysis. The
valentina_108 [34]

Answer:

The answer is: the real gain in real GDP between 2010 and 2000 is 18.34%

Explanation:

First we have to determine the real GDP using the GDP deflator.

GDP deflator = (nominal GDP / real GDP) x 100

For year 2000:

24 = ($672 billion / real GDP ) x 100

2,400 = $672 billion / real GDP

real GDP = $0.28 billion

For year 2010:

51 = ($1,690 billion / real GDP ) x 100

5,100 = $1,690 billion / real GDP

real GDP = $0.331 billion

To calculate the real gain between real GDP from year 2000 to year 2010, we divide real GDP 2010 over real GDP 2000 and subtract 1:

($0.331 billion / $0.28 billion) -1 = 0.1834 x 100% = 18.34%

5 0
4 years ago
Fairfax Pizza borrowed 745,000 dollars to build a new restaurant for 745,000 dollars. The decision to spend 745,000 dollars on t
EastWind [94]

Answer:

Financing decision

Explanation:

Financing decision is concerned with borrowing and allocating funds for investments.

As such, the decision to borrowed 745,000 dollars and use the fund to build a new restaurant for 745,000 dollars is a financing decision.

Capital Budgeting decision-making process involves plans around any long term capital expenditures whose returns (cash inflows and outflow) are expected to be earned in more than a year.

8 0
4 years ago
If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,0
lyudmila [28]

Answer: Option (b) is correct.

Explanation:

Given that,

short-run equilibrium output = 10,000

income-expenditure multiplier = 10

potential output (Y*) = 9,000

Expenditure multiplier = \frac{1}{1-slope\ of AE function}

10 = \frac{1}{1-slope\ of AE function}

Slope of AE function = 0.9

slope of AE =  MPC (1-t)  t =0,

MPC = 0.9

Delta Y (DY) = 1000

government expenditure multiplier ⇒ \frac{1}{1 - MPC} = 10

Delta G = \frac{DY}{government\ expenditure\ multiplier}

             = \frac{1,000}{10}

             = 100

Government purchases must be Decrease by 100.

4 0
3 years ago
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