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pishuonlain [190]
3 years ago
10

Potter & Lopez Inc. just sold a bond with 50 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12

%, and they were issued at their $1,000 par value. The current yield on similar straight bonds is 15%. What is the implied value of each warrant?
Business
1 answer:
AfilCa [17]3 years ago
4 0

Answer:

$3.76

Explanation:

Calculation of the implied value of each warrant

First step is to find the straight-debt value

Straight-debt value:

N = 20

I/YR = 15

PMT = −120

FV = −1000

PV = $812.22

Using this formula

Total value = Straight-debt value + Warrant value

Where,

Total value =$1,000

Straight-debt value=$812.22

Warrant=50

Let plug in the formula

$1,000 = $812.22 + 50

Second step is to find the warrant value

Warrant value= ($1,000 −$812.22)/50

=$187.78/50

=$3.7556

Approximately $3.76

Therefore the implied value of each warrant will be $3.76

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Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than
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Complete Question:

Determine the utilization and the efficiency for each of these situations:

a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per

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c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than

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It's not (true) actually. Whether the design capacity is comparatively (high), the utilisation could be (low) even though the efficiency was (high).

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Utilisation = \frac{4}{6}

Efficiency  = \frac{4}{5}

U = 1000/2000

e = 1000/1000

4 0
3 years ago
The concept referring to the rights inherent in a supervisory position to give orders and expect the orders to be obeyed is:____
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Authority can be defined as the legal right of a person or superior to command his subordinates. On the other hand, accountability refers to the duty of an individual to carry out his performance as per the company standards. The direction of the flow of authority is from the superiors to subordinates.

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Why is it important to have authority?

Authority can be used to protect our rights to life, liberty, and property. Authority can be used to provide order and security in people's lives. For example, air traffic controllers prevent accidents and provide safety for airplane passengers. Authority can be used to manage conflict peacefully and fairly.

Supervisory position :

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5 0
2 years ago
A bank currently has $50 million in deposits, $6 million in cash in the vault, $4 million on deposit with Fed, and $5 million in
yuradex [85]

Answer:

A) $800,000

Explanation:

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The bank has currently $50 million in deposits and $10 million in reserves ($6 million in cash and $4 million in the Fed), so its reserves are exactly 20% of its total deposits. So if any new deposits are received, the bank will have to keep as reserves 20% of it (= $1,000,000 x 20% = $200,000).

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