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Svetradugi [14.3K]
3 years ago
14

Pandar Corp. issues 12-year, AA-rated bonds. What is the yield on one of these bonds? Disregard cross-product terms; that is, if

averaging is required, use the arithmetic average.
Business
1 answer:
Alecsey [184]3 years ago
8 0

Answer:

8.58%

Explanation:

risk free rate 2.8%

premiums on Pandar Corp.'s bonds:

  • maturity risk premium = 0.1 x (12 - 1)% = 0.1 x 11% = 1.1%
  • liquidity premium on Pandar Corp.'s bonds = 0.55%
  • default risk premium for AA bonds = 0.80%
  • inflation premium (assuming 4% inflation for first 4 years and 3% for the rest of the years) = (4% x 4/12) + (3% x 8/12) = 3.33%

total premiums on Pandar Corp.s' bonds = 5.78%

yield on Pandar Corp-'s bonds = risk free rate + premiums = 2.8% + 5.78% = 8.58%

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7 0
3 years ago
You've got your budget, credit history and saving in order. whats your next step before shopping for a home?
Softa [21]

Answer:

The correct answer is letter "A": Shop for a mortgage.

Explanation:

After setting a budget and starting a housing fund, checking your credit report and scores, and accruing a certain amount of money to make possible acquiring a house, the next step implies being pre-approved by a mortgage lender. This will give you an idea of how much money a bank might approve to lend you to purchase the property. Thus, after this and finding a Real Estate agent, <em>you can start checking what houses are available for purchase according to what you can afford.</em>

7 0
3 years ago
A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?
In-s [12.5K]

Answer: d)Firms have to pay more to attract inputs, as these inputs have to share the risk.

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The chances of risk have have to be shared by both the parties so the owners or investors are going to indulge in the business when they gain some benefit e.g.-more payment.

Other options are incorrect because entrepreneurship will not be encouraged through this process. Incomes will not be distributed equally and neither the prudent risk management will be aimed.Thus, the correct option is option(d).

7 0
3 years ago
If a firm has a cost of equity of 15 percent, and the firm is 100 percent equity financed. The firm is contemplating a $150 mill
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Answer:

c. $166.67 million

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cost of expansion = new equity issued / (1 - flotation costs)

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Flotation costs increase the cost of equity, since they are an expense that decreases the net amount of money received by a corporation when it issued new stocks or new bonds.

4 0
3 years ago
A seller sold a house to a buyer allowing the buyer to take over the loan on a "subject to" basis. After 2 years, the buyer defa
lubasha [3.4K]

Answer:

A. The seller would be primarily liable.

Explanation:

Subject to basis is a form of home buying options in real estate. It is a situation where the buyer takes over existing loan of a seller and make commitment to seller to continue repaying the loan to the lender.

Though the buyer will taken over the loan from the seller and make repayment to the lender, there is no legal obligation on buyer`s part that makes him/her liable to the lender. The seller still remain liable despite the the taking over. So  option A is right while B to D is wrong because it`s only the seller that is primarily liable to the lender.

4 0
3 years ago
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