1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
deff fn [24]
3 years ago
13

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1000, and a coup

on rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?
Business
1 answer:
lisabon 2012 [21]3 years ago
8 0

Answer:

Ans. The price of the bond immediately after it makes its first coupon payment is $1,068.02

Explanation:

Hi, we have to bring to present value the remaining cash flows, that is 9 coupons and its face value, so we need to use the following equation.

Price=\frac{Coupon((1+YTM)^{n}-1) }{YTM(1+YTM)^{n} } +\frac{FaceValue}{(1+YTM)^{n} }

Where:

Coupon = 0.07*$1,000=$70

YTM = Yield to maturity, in our case 6% or 0.06

n = 9 (since the bond is paying every year and there are 9 years left until maturity)

Face Value= $1,000.

Everything should look like this

Price=\frac{70((1+0.06)^{9}-1) }{0.06(1+0.06)^{9} } +\frac{1,000}{(1+0.06)^{9} }

Therefore:

Price=476.12+591.90=1,068.02

So, the price of this bond right after paying its first coupon is $1,068.02

Best of luck.

You might be interested in
The italian dynamic markings traditionally used to indicate very soft, soft, and very loud are respectively _____
tino4ka555 [31]
Music is the worldwide language, but the widely held of Western classical music has been written by composers with markings in Italian. So, in order to follow the composer’s notated musical instructions, a player must embrace a few Italian words into their dictionary, along with their symbols and meanings.So in this case, Pianissimo means very soft which is denoted by pp, Piano means soft which is denoted by p and Fortissimo means very loud which is denoted by ff.
4 0
3 years ago
Which is correct? please help​
choli [55]

Answer:

c

Explanation:

because if you have all new employees people won't see you as a serious company

4 0
2 years ago
Read 2 more answers
At the end of the systems implementation phase, the final report to management should include ____.
Nataly_w [17]
As far as I remember, at the end of the systems implementation phase, the final report to management should include these elements:

1. <span>a comparison of actual costs and schedules to the original estimates;

2. </span>final versions of all system documentation;

3. <span>planned modifications and enhancements to the system that have been identified;

It's necessary thing in system analysis.</span>
3 0
3 years ago
Which style of decision making will consumers who develop brand loyalty use?
lys-0071 [83]
Opportunity based decision making
7 0
2 years ago
Wilma, who lives in New York, enters into a contract to buy a painting from Fred, who lives in France. The contract includes all
Shtirlitz [24]

Answer:

A court will most likely;

1. Allows the parties to rescind the contract.

Explanation:

The contract includes all the costs of insuring and shipping the painting from France to New York.

Since, the agent that made the shipping estimate makes a mistake when adding up the costs and, as a result, the shipping cost listed in the contract is $1,000 less than the actual shipping costs. A court will most likely allow the parties to rescind the contract because a part of the contract agreement has been breached in error.

7 0
3 years ago
Read 2 more answers
Other questions:
  • What percentage of data would you predict would be between 40 and 70 and what percentage would you predict would be more than 70
    9·2 answers
  • At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the p
    13·1 answer
  • Compared to _____% in 1977, the labor force participation rate for men is now approximately ______% and is expected to decrease
    10·1 answer
  • Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at prod
    8·1 answer
  • Revenues are ______. earned by selling goods or services to customers the amount of cash a company has left after it has paid it
    9·1 answer
  • The following is a trial balance of Barnhart Company as December 31, Year 1: Account Title: Debit Credit Cash 12,500 Accounts Re
    14·1 answer
  • Question 1 What forces have caused cost and management accounting systems designed decades ago to become less relevant and less
    12·1 answer
  • "Only one firm produces and sells soccer balls in the country of Wiknam, and as the story begins, international trade in soccer
    14·1 answer
  • Terrance has just signed a contract with a bank to get a loan to buy a new house. What is TRUE about this contract? A. Both the
    15·1 answer
  • Background:
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!