1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
FinnZ [79.3K]
3 years ago
9

Big Canyon Enterprises has bonds on the market making annual payments, with 18 years to maturity, a par value of $1,000, and a p

rice of $965. At this price, the bonds yield 7.7 percent. What must the coupon rate be on the bonds?
Business
1 answer:
Digiron [165]3 years ago
7 0

Answer:

7.3%

Explanation:

Bond price is the sum of present value of coupon payment and face value of the bond. If the price is available the coupon payment can be calculated by following formula

As per given data

n= 18 years

Par value = $1,000

Price = $965

YTM = 7.7%

As we have the value of the bond we need to calculate the coupon payment using following formula:

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

$965 = C x [ ( 1 - ( 1 + 7.7% )^-18 ) / 7.7% ] + [ $1,000 / ( 1 + 7.7% )^18 ]

$965 = C x 9.57 + $263.10

$965 - 263.10 = C x 9.57

701.9 = C x 9.57

C = 701.9 / 9.57 = 73.34

Coupon rate = 73.34 / 1000 = 7.334%

You might be interested in
An efficient market reflectsA) only historical information.B) only the information related to events that have already occurred.
Masja [62]

Answer:

The correct answer is option D.

Explanation:

The efficient market hypothesis is a theory in modern financial economics which states that the share prices reflect all available information and alpha generation is impossible. Neither fundamental nor technical analysis can give excess returns which are also risk-free.

Share prices in an efficient market reflect all the information, both public and private. This information includes future predictions. All this information is widely available to all the investors and they correctly interpret this information and quickly adjust to it.

4 0
3 years ago
Which of the following is not one of the competitive forces included in the competitive forces​ model?
photoshop1234 [79]

Answer:

C) the firms ability to differentiate its product

Explanation:

Porter five forces of the model comprise rivalry among competitors, bargaining power of suppliers, bargaining power of buyers, the threat of new entrants, the threat of substitution.

The rivalry among competitors deals with the strength and weaknesses of the competitors so that the business does the planning accordingly.  

The bargaining power of suppliers stated the change in the price of the product made by the supplier's offer plus the customer are attracted towards the product as the product is unique which impact the overall profit

The bargaining power of buyers deals with the number of buyers and how much orders are given by a single buyer.  

The threat of new entrants impacts the overall position of the business if the competitor enters the market.  

The threat of substitution is an alternative way to produce the goods and services which can also drop your position and also it directly impact profitability.  

4 0
3 years ago
Which is most often a cause for a change in career or lifestyle?
Andre45 [30]

Answer:

adjustment in life roles

7 0
3 years ago
Read 2 more answers
In 2012, a nation’s population was 10 million, its real GDP was 1.21 billion. By 2013, its the population had increased to 12 mi
julsineya [31]
No no it’s not going on
Yes yes I will
A
7 0
3 years ago
How much of the federal government's income comes from individual income tax? (1 point)
Lilit [14]
The right answer for the question that is being asked and shown above is that: "47 percent." the federal government's income comes from individual income tax is that of <span>47 percent. This is the correct answer as far as the federal government's income is concerned.</span>
5 0
3 years ago
Other questions:
  • What are two examples of when credit, if used responsibly,can be positive
    6·1 answer
  • How is it possible to have a large amount of assets but only modest net worth?
    14·1 answer
  • At least how often must employees be trained on bloodborne pathogens?
    5·1 answer
  • What are a list of items that the most price elastic demand​
    9·1 answer
  • Identify and discuss the five questions that should be answered by a good mission statement.
    15·1 answer
  • Levi has always wanted to be a lawyer, but the top career cluster for him, according to his personal assessment, is the Arts, A/
    13·1 answer
  • Company A accounts for its investment in Company B under the equity method. Company A carried the Company B investment at $150,0
    15·1 answer
  • Your and your business partner bake bread to be sold at the Madison Farmer's Market every Saturday. You calculate the underage c
    5·1 answer
  • Coronado Industries purchased equipment in 2019 at a cost of $912000. Two years later it became apparent to Coronado Industries
    7·1 answer
  • According to msrb rules, if a control relationship exists between an issuer and a municipal securities dealer, the nature of tha
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!