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galben [10]
4 years ago
12

Analysts estimate that a bond has a 40 percent probability of being priced at $950 and a 60 percent probability of being priced

at $1,050 one year from today. The bond is also callable at any time at $1,010. What is the expected value of this bond in one year?
Business
1 answer:
AnnZ [28]4 years ago
8 0

Answer:

Explanation:

40% probability that bond will be priced at $950

60% probability that bond will be priced at $1050

Expected value of the bond in one year:

(Probability*Price of bond) + (Probability * Callable price bond)= (0.4*$950)+(0.60*$1010)=$986

So, expected value is $986

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Murrr4er [49]

Answer:

Explanation:

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m_a_m_a [10]

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7 0
3 years ago
Expected cash dividends are $4.00, the dividend yield is 8%, flotation costs are 6% of price, and the growth rate is 5%. Compute
Brut [27]

Explanation:

\text { Dividend, } \mathrm{D}= 4 \\\text { Dividend yield rate }=\mathrm{D} / \text { Current price }=8 % \\\text { Current price }, \mathrm{P} 0=\mathrm{D} / 8 \%=\$ 4 / 8 \%=$ 50

\text { Flotation cost, } \mathrm{F}=8 \% \text { of current price }=\$ 50 * 8 \%=\$ 4 \\
\text { Growth rate,g }=4 % \\
\text { Cost of new common stock, } \mathrm{Ke}=[\mathrm{D} 1 /(\mathrm{P} 0-\mathrm{F})]+\mathrm{g} \\  =[\$ 4 /(\$ 50-\$ 4)]+4 \% \\
=0.086956522+0.04 \\
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12.7%

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You have 21 product displays. Six have 5 shelves and 15 have 4 shelves. It is store policy to dedicate at least one full shelf t
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