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lawyer [7]
4 years ago
7

In 2000 Jenson Inc. issued bonds with an 8 percent coupon rate and a $1,000 face value. The bonds mature on March 1, 2025. If an

investor purchased one of these bonds on March 1, 2012, determine the yield to maturity if the investor paid $1,100 for the bond.
Business
1 answer:
Vanyuwa [196]4 years ago
5 0

Answer:

Yield to maturity is 6.6%

Explanation:

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.

Face value = F = $1,000

Assuming Coupon payments are made annually

Coupon payment = $1,000 x 8% = $80

Selling price = P = $1,100

Number of payment = n = 13 years

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

Yield to maturity = [ $80 + ( 1000 - 1100 ) / 13 ] / [ (1,000 + 1100 ) / 2 ]

Yield to maturity = [ $80 - 7.7 ] / 1100 = $72.3 /1100 = 0.066 = 6.6%

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Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when
Paladinen [302]

Answer: Option D

Explanation: In simple words, optimal decision refers to the decision that results in at least that level of utility benefit as all other available options do . In other words, it has maximum potential for profit and least expectation of loss.

In such decision the utility is taken into consideration and is calculated on the basis of marginal cost and marginal benefit. If it provides for the higher probability that the marginal cost will be equal to marginal benefit than it would be considered as an optimal decision.

Hence the correct option is D.

3 0
3 years ago
If a bond is currently trading at its face​ (par) value, then it must be the case​ that: A. the​ bond's yield to maturity is equ
strojnjashka [21]

Answer:

A) the​ bond's yield to maturity is equal to its coupon rate

Explanation:

If the bonds yield to maturity is equal to its coupon rate it means that the interest paid by the buyers on the face value of the bond is equal to the internal rate of return for the present value of future cash flow. Only in this scenario, a bond is traded at its face or par value.

7 0
3 years ago
Fields Company has two manufacturing departments, forming and painting. The company uses the weighted-average method of process
Roman55 [17]

Answer:

See attached file

Explanation:

8 0
3 years ago
Calculate the presentvalue of $5,000 received five years from today if your investments pay a. 6 percent compounded annually b.
kaheart [24]

Answer:

Given:

Amount = $5000

Tenure = 5 years.

Future value = Present value\times (1+r)^{n}

where

n is number of periods

r is rate per period.

(a) 6% compounded annually.

Interest is compounded annually

No of periods in 5 years = 5

Future value = 5000(1+0.06)^{5} = 5000 × 1.33823 = $6691.15

(b) 8% compounded annually

Interest is compounded annually

No of periods in 5 years = 5

Future value =5000(1+0.08)^{5} = 5000×1.46933 = 7346.65

(c) 10% compounded annually

Interest is compounded annually

No of periods in 5 years = 5  

Future value = 5000(1+0.10)^{5} = 5000×1.61051 = $8052.55

(d) 10% compounded semiannually

Interest is compounded semiannually

No of periods in 5 years is 5*2 = 10

Rate per period = 10÷2 = 5%

Future value =5000(1+0.05)^{10} = 5000×1.62889 = $8144.45

(e) 10% compounded quarterly

Interest is compounded annually

∴No of periods in 5 years = 5×4 = 20

Rate per period = 10÷4 = 2.5

Future value = 5000(1+0.025)^{20} = 5000×1.63862 = $8193.10

5 0
3 years ago
The function of marketing that tells customers where they can buy the product and how the product gets there is called
vladimir2022 [97]

Answer:

Place, where the consumer/customer can go when making a purchase on a product.

Explanation:

Good luck, I majored in Business Management

3 0
2 years ago
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