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olga_2 [115]
3 years ago
9

will issue a new 10 year AA rated corporate bond with a coupon rate of 7.00%. The bond pays interest semi-annually and has a fac

e value of $ 1,000. If existing AA corporate bonds with 10 years to maturity have a yield to maturity of 5.00%, what will be the discount or premium of JAN Corp.’s bond relative to its face value.
Business
1 answer:
9966 [12]3 years ago
6 0

Answer:

The bond is sold at a premium of $1155.89 -$1000 = $155.89

Explanation:

N = 10 years * 2 semiannual =20 payments of interest

coupon interest = 7% /2 =  0.035

market interest = 5% /2 = 0.025

interest = 1000*0.035 = $35 per semiannual

Pv interest for interest = [1-1/(1+0.025)^20]0.025 = 15.89 * $35 = $545.62

Pv for capital = 1000/(1+0.025)^20 = $610

value of the Bond = 610.27+ 545.62 = 1155.89

The market rate is less than the coupon rate meaning the bond is traded at a premium

Pv factor for many years = [1-1/(1+r)^n]/r

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Answer:

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Explanation:

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3 years ago
Suppose that you are a student worker in the statistics department and they agree to pay you using the random pay system. Each w
artcher [175]

Answer:

The probability of getting paid more than $6500 in 100 weeks is 0.6%

Explanation:

In this problem, we need to define a probabilty distribution for the money earned.

The 100-week payoff can be expressed as

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Now, as it is a coin flip, H is a binomial random variable with p=0.5 and n=100

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8 0
4 years ago
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Answer:

False

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Diano4ka-milaya [45]

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d. Calculate total revenue minus total expenses

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