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Reika [66]
3 years ago
14

The Sisyphean Company has a bond outstanding with a face value of $ 5 comma 000 $5,000 that reaches maturity in 5 5 years. The b

ond certificate indicates that the stated coupon rate for this bond is 9.1 9.1​% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 8 8​%, then the price that this bond trades for will be closest​ to:
Business
1 answer:
lilavasa [31]3 years ago
8 0

Answer: $5,219.59905

the price that the bond traded for would be closest to

$5,220 (rounded to whole number)

Explanation:

Using the price of bond formula below:

Price = C × 1 - [(1+r)^-n] /r + F/ (1+r)^n

C = coupon rate = 9.1% of face values ($5,000)

F= Face value(par value) = $5,000

n = number of years to maturity; 5

r = YTM (yield to maturity) = 8% = 0.08

Price = 455 × 1 - [(1+0.08)^-5]/0.08 + 5,000/(1+0.08)^5

Price = 455 × 1 - [(1.08)^-5]/0.08 + 5,000/(1.08)^5

Price= 455 × ( 1 - 0.680583197)/0.08 + 5,000 / 1.46932808

Price= 455 × (0.319416803)/0.08 + 3,402.91598

Price = 1,816.68307 + 3,402.91598

Price= $5,219.59905

≈$5,220 to the nearest whole number.

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Answer: a. I, II and III are true

Explanation:

From the question, the statements that are true are:

I. 4% is the desired real rate of interest. II. 6% is the approximate nominal rate of interest required.

III. 2% is the expected inflation rate over the period.

4% is the desired real rate of interest because that's the rate at which the investor is willing to buy the goods in future.

2% is the expected inflation rate over the period because at that rate, there's expectation of future rise in price while 6% is the approximate nominal rate of interest required which is the addition of the 4% and the 2%.

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Answer:

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April            25,000*40%=10,000                  $15                  $150,000

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June            60,000*40%=24000                   $15                  $360,000

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April            25,000*60%=15,000                     $12                  $180,000

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June            60,000*60%=36,000                    $12                  $432,000

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8 0
3 years ago
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In the late 1800s, Cecil Rhodes took the money he made from renting water pumps to miners and used it to buy up the claims of sm
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C. Entrepreneurial ability is the brain behind the business entity . In a business an entrepreneur is the person who collects capital, purchase land and maintains the operations.

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