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lara31 [8.8K]
3 years ago
7

The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond

before it matures, your realized return is known as the holding period yield (HPY).
Requirement:
1. Suppose that today you buy a bond with an annual coupon rate of 8% for $1,170. The bond has 16 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of $1,000.
2. Two years from now, the YTM on your bond has declined by 1%, and you decide to sell.
A) What price will your bond sell for?
B) What is the HPY on your investment?

Business
1 answer:
True [87]3 years ago
6 0

Answer and Explanation:

The computation of each part is to be shown in the attachment. The one statement is of final values and the other one is of formula sheet.

This one applied for all the things which need to be find out

Kindly find the attachment below:

We use the RATE formula for determining the rate of return and the same is to be considered

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Huron Investments issues $1 million in 13.250% bonds maturing August 11, 2028. The bond is callable August 11, 2023 at a call pr
Whitepunk [10]

Answer:

Huron Investments issues $1 million in 13.250% bonds maturing August 11, 2028. The bond is callable August 11, 2023 at a call premium of 2.500%. August 11, 2023 the prevailing yield is 5.250%. If Huron Investments calls the entire issue and replaces it with 5.250% bonds also maturing August 11, 2028 then each semi-annual coupon payment will decrease by <u>$125,000</u>

Explanation:

Change in semi-annual coupon = (13% - 6.75%) x 4m / 2 = $125,000

6 0
3 years ago
?an officer conducting a lineup should allow the defense attorney at the lineup to do all but which of the following?
myrzilka [38]
A<span>n officer conducting a lineup should allow the defense attorney at the lineup to do all but B. control any part of the proceedings.
This is what the officer himself or herself is doing - the defense attorney is not allowed to do such a thing. However, they can passively or actively observe the proceedings, take notes, or just record the proceedings in order to revise them later on.
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3 0
3 years ago
Use your knowledge of the challenges new managers face to complete the following sentences.
DIA [1.3K]

Answer: The correct answer is MOST

Explanation: Managers in any organization are known to provide the necessary human action inorder for the planned outcomes of the organization to be achieved. In doing the above, the mostly get involved in activities that involve motivating others and meeting people. These activities such as leading others, leading innovations and networking over time tend to be enjoyed as they are not monotonous activities like paperwork.

8 0
3 years ago
A 30-year maturity bond has a 4.9% coupon rate, paid annually. It sells today for $872.42. A 20-year maturity bond has a 4.4% co
9966 [12]

Answer:

The annualized rate if return is 5.64%

Explanation:

In calculating the annualized expected return on the bond, I set up a table in excel in order to calculate the sum of cash flows that would been received from the bond in five years coupled with the fact that the inflow from the bond on yearly basis can be reinvested at 6.1% on yearly basis.

Note that the coupon payment received at end of the year can be reinvested for 4 years, the one on year can be reinvested for 3 years and so on.

Then the amount of the inflow in year 5 is the sum of the coupon and the market price of the bond calculated as $870.94  

We can then compute annualized rate of return from the below fv formula:

FV=PV*(1+r)^N

where FV is $ 1,147.71  

PV is the cost of bond at ($872.42)

r is the rate of return that is unknown

N is 5 years period

$ 1,147.71  =872.42*(1+r)^5

$ 1,147.71 /$872.42=(1+r)^5

divide the reciprocal of each side by 5

($1,147.71/$872.42)^(1/5)=1+r

r=  ($1,147.71/$872.42)^(1/5)-1

=5.64%

Kindly find attached.

Download xlsx
7 0
3 years ago
The central idea for Janelle's speech on the importance of using sunscreen does not break down into logical divisions. Rather th
Taya2010 [7]

Answer:

find new supporting material on the topic and start again

Explanation:

Based on the information provided within the question it can be said that the suggested strategy that Janelle should apply would be to find new supporting material on the topic and start again this will allow Janelle to have more information that will help her divide her thoughts more efficiently and logically within her speech.

5 0
3 years ago
Read 2 more answers
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