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mezya [45]
2 years ago
12

A 5.75 percent coupon bond with 10 years left to maturity is priced to offer a 6.5 percent yield to maturity. You believe that i

n one year, the yield to maturity will be 6.0 percent. What is the change in price the bond will experience in dollars
Business
1 answer:
balu736 [363]2 years ago
4 0

Answer:

The change in price is $36.91  

Explanation:

Using the present value pv formula in excel the price of the bond now and in one year's time can be computed:

=pv(rate,nper,pmt,fv)

rate is the yield to maturity which is 6.5% and 6% respectively

nper is the number of years to maturity which is 10 years and 9 years respectively

pmt is the periodic payment of coupon 5.75%*$1000=$57.5

fv is the value receivable on redemption which is $1000 in both cases

=pv(6.5%,10,57.5,1000)

pv=$946.08  

=pv(6.00%,9,57.5,1000)

pv=$983.00  

Change in price =$983.00 -$946.08  =$36.91  

Find attached.

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On January 1, 2004, Kay Inc. issued its 10% bonds in the face amount of $400,000, which mature on January 1, 2014. The bonds wer
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Answer:

Unamortized discount is $43,700

Explanation:

Unamortized bond discount=original bond discount-amortization to date

original bond discount is $46,000

Amortization =interest  payable-interest expense

interest payable=$400,000*10%*6/12

                            =$20,000

Interest expense=$354,000*10%*6/12

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amortization of discount=$20,000-$17,700

                                        =$2300

unamorized bond discount=$46000-$2300

                                            =$43,700

The unamorized bond discount at the end of the first six months is $43,700

                     

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3 years ago
"If the interest rate on a U.S. one-year bond is 2%, the interest rate on a Brazilian one-year bond is 8%, and the currency prem
cluponka [151]

3% is the answer.

<u>Explanation:</u>

The financial matters of market interest direct that when the request is high, costs rise and the cash acknowledges in esteem. Conversely, if a nation imports more than it sends out, there is generally less interest in its money, so costs should decrease.

On account of cash, it deteriorates or loses esteem. The stockpile of money is dictated by the local interest for imports from abroad. The more it imports the more noteworthy the inventory of pounds onto the outside trade advertise. An enormous extent of momentary exchange monetary standards is by sellers who work for money related organizations.

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3 years ago
Fall Co. paid $500 in freight-out charges to ship $25,000 of inventory on consignment to Rodgers Co. Rodgers printed and mailed
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Answer:

$5100

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The cost of the inventory in $25000 and the cost of shipping it to the consignee, $500.

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The part of staffing that involves seeking out and attracting qualified potential job
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Answer:

Option D. None of the other options fit.

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3 years ago
Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for s
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Answer:

Decrease of $18,000

Explanation:

As there is a payment of dividend so it would reduce the stockholder equity by $50,000

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