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aleksley [76]
3 years ago
8

Dillon can buy a fixed-rate bond with a 4% coupon, a $10,000 principal, and five years left to maturity or a TIPS with the same

principal and age to maturity with a 2% coupon. Compare the two bonds if inflation runs 3% per year on average.
Select the best answer from the choices provided.

1The fixed-rate bond has a better yield.

2 The TIPS has a better yield.

3 Both yields are roughly equivalent.

4The yields vary with inflation.
Mathematics
2 answers:
Keith_Richards [23]3 years ago
7 0
<span>3 Both yields are roughly equivalent.</span>
malfutka [58]3 years ago
4 0

Answer: 1 The fixed-rate bond has a better yield

Step-by-step explanation:

a coupon rate = 4%

principal = $ 10000

x/ $10000 = 4% = 4/100

x = $400

for 5 years = $400 x 5 = $2000

with inflation of 3%

3/100 x $10000 = $300

adjusted principal = $10000 + $300 = $10300

coupon rate x adjusted principal = 4/100 x$10300 = $412per year

for 5 years =  5 x $412= $2060

b) Dillon buys buy a fixed-rate bond with a $10,000 principal

TIPS = Treasure Inflation-Protected  Security rises with its principal as inflation rises = 3% per year on average

coupon rate = 2 %

without inflation = 2/100 x $10,000 = $200

with inflation upward by 3% = 3/100 x $10000 = $300

adjusted principal = $10000 + $300 = $10300

thus coupon rate x adjusted principal = 2/100 x $10300 = $206 peryear

for 5 years =  5 x $206= $1030

Therefore $2060 > $1030

The fixed bond rate has a better yield

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tekilochka [14]

Answer:

an increase of 12%

Step-by-step explanation:

68 divided by 77 is 0.88 approximately

100-88 is 12

Tip:

do this for increase and decrease in percentage question

divide small number by big number, and subtract the quotient from 100

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3 years ago
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The sum of the lengths of any two sides of a triangle must be greater than the third side. if a triangle has one side that is 8
BartSMP [9]

1st Side: 8

2nd Side: 2x - 1

3rd Side: x

(8) + (2x - 1) > x            (2x - 1) + x > 8                        (x) + (8) > 2x - 1

       2x + 7 > x                     3x - 1 > 8                                8  > x - 1

            2x > -7                         3x > 9                                9  > x

             x > -3.5 (disregard)       x > 3                                 x < 9

3rd Side: x  ⇒ (3 < x < 9)

2nd Side: 2x - 1 ⇒ 2(3) - 1 < x < 2(9) - 1   ⇒   5 < x < 17

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3 years ago
Help help help help (-_-)
g100num [7]

Answer:

98

Step-by-step explanation:

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I NEED HELP PLEASE ASAP!!
hammer [34]

Answer:

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Step-by-step explanation:

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2 years ago
Agnes Hammer is a senior majoring in management science. She has been interviewing with several companies for a job when she gra
stiks02 [169]

Answer:

Mean = 30516.67

Standard deviation, s = 3996.55

P(x < 27000) = 0.0011518

Step-by-step explanation:

Given the data:

28500 35500 32600 36000 34000 25700 27500 29000 24600 31500 34500 26800

Mean, xbar = Σx / n = 366200 /12 = 30516.67

Standard deviation, s = [√Σ(x - xbar) / n-1]

Using calculator, s = 3996.55

The ZSCORE = (x - mean) / s/√n

Zscore = (27000 - 30516.67) / (3996.55/√12)

Zscore = - 3516.67 / 1153.7046

Zscore = - 3.048

P(x < 27000) = P(Z < - 3.049) = 0.0011518

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3 years ago
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