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nalin [4]
3 years ago
6

A bond has a par value of $1,000, a time to maturity of 15 years, and a coupon rate of 7.90% with interest paid annually. If the

current market price is $790, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
Effectus [21]3 years ago
8 0

Answer:

$5.97

Explanation:

In order to determine the capital gain of the bond in a year's time,it is first first of all important to calculate the yield to maturity on the bond which is arrived at by applying the rate formula in excel as follows:

=rate(nper,pmt,-pv,fv)

nper is the number of coupon interest the bond would pay over its entire life of 15 years which is 15

pmt is the annual interest,7.9%*$1000=$79

pv is the current market price of the bond which is $790

fv is the value of $1000

=rate(15,79,-790,1000)=10.79%

Afterwards,the price of the bond in one year' time can then be calculated:

=-pv(rate,nper,pmt,fv)

The variables in the formula are as above except for nper which would reduce by 1 in a year's time

=-pv(10.79%,14,79,1000)

pv=$ 795.97  

Hence the capital gain=price now-price one year ago/price one year ago

price now is $795.97  

price one year ago was $790

Capital gain=$795.97-$790=$5.97

Capital gain %= ($795.97-$790)/$790=0.76%

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Answer:

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3 years ago
Select all that apply. Select other ways to measure the quality of life in a country besides the real GDP per capita.
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3 years ago
In 2005, BridgePort Brewing Company expanded sales of its BridgePort India PaleAle, and BridgePort Black Strap Stout into Alabam
solmaris [256]

Answer:

C- resource planning

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5 0
4 years ago
Read 2 more answers
3. Lesley bought 4 bags of pretzels and 2 boxes of granola bars for $13.50. Landon bought 1 bag of pretzels and 5 boxes of grano
velikii [3]

Answer:

Problem 3: Let x = price of bag of pretzels Let y = price of box of granola bars  

We have Lesley's purchase: 4x+2y=13.50

And Landon's: 1x+5y=17.55

We can use the elimination method. Let's negate Landon's purchase by multiplying by -1. -1x-5y=-17.55

We add this four times to Lesley's purchase to eliminate the x variable.

2y-20y=13.50-70.2

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Plug back into Landon's purchase to solve for pretzels.

x+5*3.15=17.55

x+15.75=17.55

x = $1.80 = price of bag of pretzels

 

Problem 4.

Let w = number of wood bats sold

Let m = number of metal bats sold

From sales information we have: w + m = 23

24w+30m=606

Substitution works well here. Solve for w in the first equation, w = 23 - m, and plug this into the second.

24*(23-m)+30m=606

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m=9 = number of metal bats sold

Therefore since w = 23-m, w = 23-9 = 14. 14 wooden bats were sold.

Explanation:

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Answer: Yes they are.

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