If you hold this security to maturity, your yield to maturity is <u>9.89%</u> while your rate of return is <u>9%</u>.
<h3>What is the yield to maturity?</h3>
The yield to maturity (YTM) refers to the total rate of return earned by a bond when it makes all interest payments and repays the original principal.
YTM is equal to a bond's internal rate of return (IRR) if the bond were held to maturity.
<h3>Data and Calculations;</h3>
Face value of security = $500
Price paid today = $455
Yield to maturity = (Face Value/Current Price) x (1/Years to Maturity) - 1
= $500/$455 x 1/1 - 1
= 0.0989
OR
Yield in dollars = $45 ($500 - $455)
= 0.0989 ($45/$455 x 100)
Rate of return = 9% ($45/$500 x 100)
Thus, if you hold this security to maturity, your yield to maturity is <u>9.89%</u> while your rate of return is <u>9%</u>.
Learn more about yield to maturity and rate of return at brainly.com/question/5524579
Answer:
False
The diamond-water paradox is illustrated by stating that the marginal benefit of the services provided by doctors and nurses is relatively lower than the marginal benefit of the services provided by major film stars. This implies that the supply of doctors and nurses is larger than the demand while the demand for major film stars is larger than the supply.
Explanation:
The marginal utility derived by film consumers from major film stars is higher than the marginal utility derived by patients from doctors and nurses. This is because consumers of the services of major film stars are willing to pay more for the services than consumers of the services of doctors and nurses. Though health is more crucial to life than films, but consumers place more utility value on films than they do on their health, especially after attaining the basic sound health. This actually explains the diamond water paradox, where consumers value diamond and are willing to pay more for diamond than they are willing to pay for life-sustaining water. In a layman's language, people are more willing to value the satisfaction they derive from one more additional film than they are to value the satisfaction they derive from additional healthcare. That means that people only care for the basic in healthcare. But, they can stake more to acquire more diamond.
Answer:
The correct answer is:
True
Explanation:
The business cycle is a model that let see how the GDP of a country changes through time. Business cycle is classified in four different stages peak, trough, contraction, and expansion. These kind of fluctuations normally occur in the trade, production and all the economic activity of a country. The business cycle refers to the changes or fluctuations that can be experienced in the economic model measured by the GDP (Gross Domestic Product) and it is reflected in the increases or decreases in economy.
Girll dont show ur face you never know what could happen
Answer:
Using the current capital structure
Ke = Rf + β(Risk premium)
Ke = 5 + 1.60(6)
Ke = 5 + 9.60
Ke = 14.60
Weighted cost of equity
= 14.60(20/100)
= 2.92%
Using the new debt-equity ratio
Ke = 5 + 1.60(6)
Ke = 5 + 9.6
Ke = 14.60%
Weighted cost of equity
Ke = 14.60(60/100)
Ke = 8.76%
Difference in cost of equity
= 2.92% - 8.76%
= -5.8%
Explanation:
There is need to calculate the cost of equity based on capital asset pricing model where Rf represents risk-free rate, Rp denotes risk-premium and β refers to beta. Then, we will calculate the weighted cost of equity by multiplying cost of equity by the proportion of equity in the capital structure. We will also calculate the new weighted cost of equity by multiplying the cost of equity the new proportion of equity in the capital structure. Finally, we will deduct the new weighted cost of equity from the old weighted cost of equity.
