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vlada-n [284]
3 years ago
7

A company releases a​ five-year bond with a face value of​ $1000 and coupons paid semiannually. If market interest rates imply a

YTM of 10​%,which of the following coupon rates will cause the bond to be issued at a​ premium?
A) 8%
B) 12%
C) 7%
D) 10%
Business
1 answer:
maria [59]3 years ago
8 0

Answer:

B) 12%

Explanation:

As we know that the coupon rate and YTM is equal if it is sold at par. If the coupon rate is less than the YTM than the bond is sold at discount and if the coupon rate is more than the YTM than the bond is sold at premium

Since the question is asking about the coupon rate if the bond is sold at premium so the coupon rate would be higher than the YTM.  

So, the coupon rate would be 12%

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Answer:

beta = 1.64

Explanation:

in order to calculate beta, we can use the cost of equity formula:, but instead of cost of equity we can use expected return:

expected return = risk free rate + (beta x market risk premium)

11.2% = 3% + (beta x 5%)

beta x 5% = 11.2% - 3% = 8.2%

beta = 8.2% / 5% = 1.64

in order to calculate beta, we can use the cost of equity formula:

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3 years ago
In 4-6 sentences explain the savings-borrowing-investing cycle.
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3 years ago
Tyler Weinrich, a single investor in the 15% federal tax bracket, owns 150 shares of Newmont Exploration. The stock has risen fr
aleksandrvk [35]

Answer:

450 shares

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Answer:

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where,

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