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Liono4ka [1.6K]
3 years ago
7

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles,

whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with three years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
Business
1 answer:
Vlad [161]3 years ago
4 0

Answer:

Value of the Treasury note is $800,178.78

Explanation:

The price of bond can be calculated by discounting all the future cash flows associated with that bond

We will use the following formula to calculate the value of the Treasury note.

Value of Treasury note = C x ( 1 - ( 1 + r )^-n / r ) + ( F / ( 1 + r )^n )

Where

From the given statement in the question, it is concluded that the coupon payment is made twice a year.

F = Face Value = $1,000 ,000

C = Coupon Payment = $1,000,000 x 3% x 6/12 = $15,000

n = number of periods = 3 years x 12 / 6 = 6 peiods

r = Yield to maturity = 11% x 6/12 = 5.5%

Placing values in the formula

Value of Treasury note = $15,000 x ( 1 - ( 1 + 5.5% )^-6 / 5.5% ) + ( $1,000 / ( 1 + 5.5% )^6 )

Value of Treasury note = $74,932.95 + $725,245.83

Value of Treasury note = $800,178.78

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Answer:

the answer is option B) the leaders of Jayhawk Foods should pursue a multidomestic strategy that includes new "local" brands.

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Understanding how best to meet your customers needs is a sure way to maximize profits and generate more sales.

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3 years ago
True or false. hospital bylaws define the process for documentation within a health record for all members of the workforce.
solong [7]
The statement is "True".

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4 0
3 years ago
Suppose the price elasticity of demand for cereal is negative −1.03. If​ so, then the demand for cereal is (unit-elastic, elasti
kari74 [83]

Answer:

The demand for cereal is elastic.

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Explanation:

The price elasticity of demand is the degree of responsiveness of quantity demanded to change in price. A negative price elasticity implies that the product is a normal good.

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5 0
3 years ago
Consider the capital asset pricing model. The market degree of risk aversion, A, is 3. The risk premium is 2.25%. If the risk-fr
inna [77]

Answer:

SO expected return on Mkt Portfolio Rm = 10.75%

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3 0
3 years ago
Which of the following is a condition that triggers the penalty for negligence or intentional disregard? 1) the taxpayer underst
Vsevolod [243]

Answer:

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Thus option (2) is correct.

5 0
3 years ago
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