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barxatty [35]
3 years ago
14

The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas Company has a bond with a coupon rate of 10 pe

rcent outstanding. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?
Business
1 answer:
motikmotik3 years ago
6 0

Answer:

Decrease in price of the bond by 16.01%

Explanation:

Find the price of the bond with the two different YTMs and compare the two prices;

<u>a.) at 7% YTM and semi-annual coupons</u>

N = 12*2 = 24

I/Y = 7%/2 = 3.5%

FV = 1,000 (use 1000 as FV if not given)

PMT = (4%/2)*1000 = 20

PV = $759.12

b.) <u>at 7% YTM and semi-annual coupons</u>

N  = 24

I/Y = (7%+2%)/2 = 4.5%

FV = 1,000 (use 1000 as FV if not given)

PMT = (4%/2)*1000 = 20

PV = $637.61

Percentage change in price = [($637.61 - $759.12)/$759.12] *100

Percentage change in price = -16.01%

There is a decrease in price of the bond by 16.01%

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umka2103 [35]

Answer:

contractual vertical marketing system

Explanation:

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Here also the Walmart is the one which shall supply goods at the last to consumers and that the company P&G shall supply goods to Walmart. This is the chain. Now this is a vertical chain, as from producer to seller to consumer.

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3 years ago
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stock sells for $100 rights-on, and the subscription price is $90. Ten rights are required to purchase one share. Tomorrow the s
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Answer:

$99.09

Explanation:

Calculation for What is Tricki's expected price when it begins trading ex-rights

Using this formula

Expected price=Stock rights-on- [ (Stock rights-on-Subscription price)÷(10 rights+ One share)]

Let plug in the formula

Expected price=$100-[($100-$90)÷(10+1)]

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3 0
3 years ago
Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart wi
Mekhanik [1.2K]

Answer:

Instructions are below.

Explanation:

Giving the following information:

Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart will receive payments for 30 years. The discount rate is 9 percent, compounded monthly.

To calculate the present value, first, we need to determine the final value.

i= 0.09/12= 0.0075

n= 30*12= 360

<u>Martha:</u>

FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

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FV= {200*[(1.0075^360)-1]}/0.0075 + {[200*(1.0075^360)]-200}

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<u>Stewart:</u>

FV= {A*[(1+i)^n-1]}/i

A= monthly payment

FV= {200*[(1.0075^360)-1]}/0.0075

FV= 366,148.70

PV= 366,148.70/1.0075^360

PV= $24,856.37

Martha has a higher present value because the interest gest compounded for one more time.

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A major drawback with lot-for-lot sizing is?
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