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xz_007 [3.2K]
3 years ago
5

You are considering investing in a GM bond with 7 years to maturity. The face value of the bond is $1,000. The coupon rate is 6%

(annual payments). When the market requires a yield to maturity of 5% for this bond, what is the price of the GM bond
Business
1 answer:
Lapatulllka [165]3 years ago
6 0

Answer:

Price of bond is = $ 1057

Explanation:

As we know that;

Price of bond = C * [1-(1+r)∧-n] / r  +   F / (1+r)∧n

where C = periodic coupon payment = 1000 * 6%= 60

         F = Face value of bond = 1000

        r = yield to maturity = 5% = 0.05

        n = number of periods till maturity = 7 years

         Putting values;

              = 60 * [ 1- (1+ 0.05)∧-7 ]/ 0.05  +  1000 / (1+0.05)∧7

              = 60 * (0.2893 / 0.05) +   710

             =  60 * 5.786 +  710

              =  347.16 +710

              =  1057

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The business arrangement in the newspaper industry in which two separately owned papers in the same city are permitted to combin
musickatia [10]

Answer: Joint operating agreement

Explanation:

 The joint operating agreement is one of the concept that helps in protecting the business or the industry from the failure that helps in governing the partnership between any two organization.

In this type of agreement any two organization are basically contributing their power and the resources for producing the effective result.

According to the given question, the newspaper industry is one of the example of joint operating agreement in which two companies are permitted for combining their business. Therefore, Joint operating agreement is the correct answer.

8 0
3 years ago
The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $95 per share for months, and you believe
miv72 [106K]

Answer:

The price of 3 months call option on stock is 8.03.

Explanation:

Acording to the details we have the following:

P = Price of 3-months put option is $6

So = Current price is $95

X = Exrecise price is $95

r = Risk free interest rate is 9%

T = Time is 3 months=1/4

C=Price of call option?

Hence, to calculate what must be the price of a 3-month call option on C.A.L.L. stock at an exercise price of $95 if it is at the money, we have to use the formula from put-call parity.

C=P+So-<u>     X    </u>

                (1+r)∧T

C=$6+$95-  ( <u>$95      )</u>

                     (1+0.09)∧1/4

C=$6+$95-$92.97

C=8.03

The price of 3 months call option on stock is 8.03

5 0
3 years ago
The Sisyphean Company has a bond outstanding with a face value of $ 5 comma 000 $5,000 that reaches maturity in 5 5 years. The b
lilavasa [31]

Answer: $5,219.59905

the price that the bond traded for would be closest to

$5,220 (rounded to whole number)

Explanation:

Using the price of bond formula below:

Price = C × 1 - [(1+r)^-n] /r + F/ (1+r)^n

C = coupon rate = 9.1% of face values ($5,000)

F= Face value(par value) = $5,000

n = number of years to maturity; 5

r = YTM (yield to maturity) = 8% = 0.08

Price = 455 × 1 - [(1+0.08)^-5]/0.08 + 5,000/(1+0.08)^5

Price = 455 × 1 - [(1.08)^-5]/0.08 + 5,000/(1.08)^5

Price= 455 × ( 1 - 0.680583197)/0.08 + 5,000 / 1.46932808

Price= 455 × (0.319416803)/0.08 + 3,402.91598

Price = 1,816.68307 + 3,402.91598

Price= $5,219.59905

≈$5,220 to the nearest whole number.

8 0
2 years ago
You plan to borrow $40,000 at a 6% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year pay
STALIN [3.7K]

Answer:

Interest for second year $2,114.08

Explanation:

given data

loan Amount = $40,000.00  

Interest rate r = 6.00%  

time period t = 7  

solution

we get here first Equal Monthly Payment EMI that is express as

EMI = \frac{P \times r \times (1+r)^t}{(1+r)^t-1}      ................1

here P is Loan Amount and r is rate and t is time period  

put here value and we get  

EMI = \frac{40000 \times 0.06 \times (1+0.06)^7}{(1+0.06)^7-1}    

EMI = $7165.40  

now

we get here interest for second year that is

Closing balance at year 1 = opening balance + Interest - EMI Payment

Closing balance at year 1 =  $40,000  + $2400 - $7165.40  

Closing balance at year 1 =   $35234.60

so Interest for second year $2,114.08

8 0
3 years ago
Good and bad studyhabbits and an example of each?
kolbaska11 [484]
Good habits:
Be organized- Have all materials needed in study area
Bad Habits:
Do not leave harder or more challenging question for the last- knock out easier assignments early when you are fresh
3 0
3 years ago
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