Answer:
The price of the bond today is $1,131.48
Explanation:
Face value (FV): $1,000
Coupon rate: 8.3%
-> counpon received semi- annually (PMT) = $1000 * 8.3%/2 = $41.5
Tenor: 11 years -> number of payment (NPer) = 11*2 = 22
YTM: 6.6% -> semi-annual rate = 6.6%/2 = 3.3%
Present value = Future Value/ (1+ YTM)^tenor
We can use excel to calculate Present Value of annual payment
= PV(Rate,NPer,-PMT) = PV(3.3%,22,-41.5) = $641.94
The price of bond today = present value of face value + present value of coupon received annually
= 1000/(1+3.3%)^22+ 41.5/(1+3.3%)^22 + 41.5/(1+3.3%)^21+....+ 41.5/(1+3.3%)^1
= 1000/(1+3.3%)^22 + 641.94
= 1,131.48
Answer: Less than $496000.
Explanation:
This is the case where market rate of interest is greater than the coupon rate.
current market rate of interest = 11%
face amount = $496000
bears interest at the rate of 10%
In this case, buyer will purchase these bond below the face value and hence bonds are issued at a discount. So, the price of these bonds are less than the face value.
This is due to the higher market interest rate because if a buyer can get higher return from market, so why would he buy these bonds.
∴ These bonds will sell at a price that is less than $496000.
Answer:
True
Explanation:
Project scope deals with the specific requirements or tasks necessary to complete the project. Scope is important to manage on any project, because if you can’t control the scope of the project, you’re not likely to deliver it on time. Also should the scope get widened it will result in time taken to complete the project.
Every project is faced with the triple constraint, which are the time, scope and cost.
Kindly see the attached for further clarity
Answer:
Bond A
Explanation:
Interest rate risk is the likelihood of loss to bondholders emanating from an increase in a bond's market interest rate which is also the yield to maturity.
However, a bond is issued at a premium when its market interest rate is lower than the coupon rate and at a discount when the reverse is the case.
In this instance, bond A was issued at a discount while B was issued at a premium, hence, the market interest rate of Bond A is higher and it has a higher interest rate risk due to its yield to maturity which made it trade at a discount to the face value of $1000 per bond
Capitalism, most businesses have a profit motive. Describe at least one reason that businesses with a profit motive may be helpful for society and at least one reason that they may be harmful for society
