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jeyben [28]
4 years ago
9

If there is a 5 year bond with 10% coupon rate, which was purchased at $980 and sold at $1020 by end of year 4, what is the inve

stor's yearly rate of return? How does it compare to coupon rate and YTM?
Business
1 answer:
Gennadij [26K]4 years ago
7 0

Answer:

14%

Explanation:

Rate of return = Coupon + (Selling price - face value) / face value

Rate of return  = $98 + ($1,020 - $980) / $ 980

                           = 0.14

                            = 14%

YTM = [C + (F - P) / n] ] / [(F + P) / 2 ]

Where:

  • C = Coupon
  • F = Face Value
  • P = Selling Price
  • n = Years to Maturity.

YTM = [$98 + ($980 - $1020) / 5] ] / [($980 + $1020) / 2 ]

       = 0.09

       = 9%

Thus, the yearly rate of return (14%) is higher than the coupon rate (10%), and the YTM (9%).

         

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Answer:

D) all of the above

Explanation:

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PV = CF / rate

CF = 50

If rate= 5%;

PV = 50/0.05 = $1,000

If rate = 2%;

PV = 50/0.02 = $2,500

With these two calculations, we see that;

-the bond price increased by $1,500

-you could sell this bond at a capital gain, meaning you can sell it a higher price that what you bought it for.

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Hence , all these choices are correct!

5 0
3 years ago
Lin Wai's company, New Home Builders Corp., specializes in designing homes that have wide hallways and walk-in showers that coul
love history [14]

Answer:

strengths

Explanation:

A SWOT analysis includes strengths, weaknesses, opportunities and threats:

  • strengths: analyses what does your company do well and distinguish it from the competition.
  • weaknesses: analyses what are your company's weak spots and what does your competition do better than you.
  • opportunities: new situations that can favor your company.  
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8 0
3 years ago
Identify each of the following terms or phrases as an accounting (a) principle, (b) assumption, or (c) constraint.
german

Answer and Explanation:

The identification of the following terms as an accounting principle, assumption or constraint is

1 Business entity    = Assumption

2. Measurement  = Principle

3 Cost-benefit   = Constraint

4 Revenue recognition  = Principle

In this way the identification of the accounting terms would be done

The same is relevant too

7 0
3 years ago
If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 101st unit of good X
lys-0071 [83]

Answer:

C) more than 5Y

Explanation:

the opportunity cost of producing 101 units of X = 5 units of Y

if the opportunity costs increase as the number of units produced increases, then the opportunity cost of producing 201 units of X will be more than 5 unit of Y. This is simply because 5 units of Y was the opportunity cost of producing 101 units of X and the opportunity costs are increased.

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3 years ago
Describe some strategic differences between these firms. What type of trade-off decisions have these firms made
Yuri [45]

Please find full question attached

Answer and Explanation:

I will use Apple and HP in this comparison.Here I would compare Apple's laptop to that of Hewlet Packard as this is where they meet in the industry. Apple employs a strategy of differentiation and standing out in competition through their products. They aim to create products that are quite different and unique/innovative from other products in the market, and yet what the customer wants. In doing this, Apple has a trade-off for cost as they charge alot higher for their products than their competitors. HP on the other hand focus on making the best possible products that get the job done/meet the needs of customers while also being affordable. HP is more focused on affordable devices for their market and therefore have a different market segment for laptops from that of Apple. There is a trade-off for cost and market segment in this comparison

4 0
3 years ago
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