Answer: less than the coupon
Explanation:
When a bond that is bought at a premium of 205 is called before the bond matures by the issuer, this implies that the accelerated premium loss will have to be reflected in calculated yield to maturity.
It should also be noted that the YTC is the lowest among the yields for the premium bonds. Therefore, if the issuer calls the bond before maturity, the yield to call (YTC) realized by the investor would be less than the coupon.
Option B is correct.
The current value of the mortgage will be given by:
A=P(1+r/100)^n
where:
P=$150,000
r=5%
n=16 years
therefore:
A=150000(1+5/100)^16
A=150000(1.05)^16
A=$201,014.35
If He wants to pay off his mortgage now, he needs $201,014.35
It is indicating that an account balance decreased as a result of a reason other than a cash withdrawal or cashed check
Answer:
New price (P1) = $72.88
Explanation:
Given:
Risk-free rate of interest (Rf) = 5%
Expected rate of market return (Rm) = 17%
Old price (P0) = $64
Dividend (D) = $2
Beta (β) = 1.0
New price (P1) = ?
Computation of expected rate on return:
Expected rate on return (r) = Rf + β(Rm - Rf)
Expected rate on return (r) = 5% + 1.0(17% - 5%)
Expected rate on return (r) = 5% + 1.0(12%)
Expected rate on return (r) = 5% + 12%
Expected rate on return (r) = 17%
Computation:
Expected rate on return (r) = (D + P1 - P0) / P0
17% = ($2 + P1 - $64) / $64
0.17 = (2 + P1 - $64) / $64
10.88 = P1 - $62
New price (P1) = $72.88
