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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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Employee Retirement Income Security Act is established in 1974 mainly to protect the employee pension system from employer fraud.

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The Employee Retirement Income Security Act serves as an act of 1974 that contains rules on the federal income tax to favor employees.

This act, provides employee with benefit plans and a protection against wicked employers.

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4 0
2 years ago
1. Suppose two types of firms wish to borrow in the bond market. Firms of type A are in good financial health and are relatively
Olin [163]

Answer:

Type A is 7%, type b is 11%

Explanation:

We have these two firm's as type a and type b

For type A

Interest would be = risk Free rate of 2% + risk free rate of 5% = 7%

For type B

= Risk free rate of 5% + risk free rate of 6% = 11%

I would use the average of this two 9% as interest but this is not going to work for type A because this interest rate is too high. People won't want to pay this much.

8 0
2 years ago
On July 1, Stan, a steel manufacturer, telephoned Byron and offered to sell Byron six carloads of steel at $600 a ton. Byron sai
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<u>Explanation:</u>

In the given case it is valid contract as there is time, promise, benefit and obligation to do thing. But verbal contracts are difficult to prove. Stan and Byron have a verbal contract which is a promise for 10 days and the contract has exchange of goods for $600. Offer is made by Byron but the acceptance is not yet given by Stan.

Here only the offer is made and it is not yet accepted by Byron. here Stan has revoked the offer through letter so the revoke has been communicated to the other party through letter. So in this case there is no breach of contract as the contract was clearly revoked by Stan through his letter.

7 0
3 years ago
THe section of the comprehensive annual finanial report that presents tables and charts showing social and econimoc data in addi
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Answer:

Statistical Section

Explanation:

The statistical section of comprehensive annual financial report contains details of  most of PESTLE factors in numeric terms that shows to what extent these things will either affect or help the organization in near future.

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2 years ago
If a country were to place a limit on the number of cars that could be imported in a year, it would be an example of what kind o
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Subsidy imported. trade regulation
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