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dexar [7]
4 years ago
14

Kasey Corp. has a bond outstanding with a coupon rate of 5.88 percent and semiannual payments. The bond has a yield to maturity

of 4.5 percent, a par value of $2,000, and matures in 23 years. What is the quoted price of the bond
Business
1 answer:
OLga [1]4 years ago
4 0

Answer:

Price of the bond is $2392.95

Explanation:

Price of the bond is the present value of all cash flows of the bond. Price of the bond is calculated by following formula:

According to given data

Coupon payment = C = $2,000 x 5.88% / 2 = $58.8

Number of periods = n = 2 x 23 years = 46 periods

Yield to Maturity = r = 4.5% / 2  = 2.25% semiannually

Price of the Bond = $58.8 x [ ( 1 - ( 1 + 2.25% )^-46 ) / 2.25% ] + [ $2,000 / ( 1 + 2.25% )^46 ]

Price of the Bond = $58.8 x [ ( 1 - ( 1 + 0.0225)^-46 ) / 0.0225 ] + [ $2,000 / ( 1 + 0.0225 )^46 ]  

Price of the Bond = $58.8 x [ ( 1 - ( 1.0225)^-46 ) / 0.0225 ] + [ $2,000 / ( 1.0225 )^46 ]  

Price of the Bond = $1674.3 + $718.65   = $2,392.95

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5 0
4 years ago
Read 2 more answers
Suppose the demand equation​ is: Upper Q equals 80 minus 0.25 p. What is the price elasticity of demand if the price is ​$40 per
mariarad [96]

Answer:

The price elasticity of demand is -0.25

Explanation:

The demand equation is given by:

Q = 80 - 0.25p

The price elasticity of demand is the same as the rate of change of Q (Quantity demanded) with respect to p (price).

The rate of change of Q with respect to p is obtained by differentiating Q with respect to p

Q = 8 - 0.25p

dQ/dp = -0.25

Therefore, price elasticity of demand = -0.25

7 0
3 years ago
Most project resources are negotiated with:
vodka [1.7K]

Answer:

A

Explanation:

Most project resources are negotiated with: project managers

7 0
3 years ago
What is the correlation between consumer spending, discounts, rising prices, and the economy
Nataliya [291]

Inflation is the correlating factor between consumer spending, discount, rising prices and the economy.

<h3>What is an inflation? </h3>

An inflation means a persistent rise in general level of goods and service in a particular year.

  • Inflation affects consumer spending because the purchasing power of currency reduces
  • Inflation affects discount rates
  • Inflation results to rising price of goods and services
  • Inflation gives the overall economy a hard time

In conclusion, an Inflation is the correlating factor between consumer spending, discount, rising prices and the economy.

Read more about Inflation

<em>brainly.com/question/777738</em>

7 0
2 years ago
Steady As She Goes Inc. will pay a year-end dividend of $3.40 per share. Investors expect the dividend to grow at a rate of 5% i
Bezzdna [24]

Answer:

a.

15%

b.

29.57

Explanation:

The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach. The DDM values the stock based on the preset value of the expected future dividends from the stock. The price of the stock today under this model is,

P0 = D1 / r - g

Where

P0 = Price of stock

D1 = Future Dividend

r = Expected rate of return

g = Growth rate

a.

As we have the price of the price of the stock, we need to calculate the expected rate of return by extracting the formula.

r = (D1 / P0) + g

As per given data

P0 = Price of stock = $34

D1 = Future Dividend = $3.40

g = Growth rate = 5% = 0.05

Placing Values in the formula

r = ( $3.4 / 34 ) + 0.05

r = 0.15  = 15%

b.

As per given data

D1 = Future Dividend = $3.40

g = Growth rate = 5% = 0.05

r = Expected rate of return = 16.5%

Placing Values in the formula

P0 = D1 / r - g

P0 = $3.40 / (16.5% - 5%)

P0 = $29.57

3 0
4 years ago
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