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Furkat [3]
3 years ago
13

A 10-year (zero-coupon) Treasury bill with face value of $100 per share is selling at $70.89 per share. There is a 10-year corpo

rate bond with a 5% coupon rate and face value of $100 per share. The coupon payment is every 12 months. The price of the bond is $96.23 per share. The 10-year, zero coupon Treasury bills are selling at $70.89. What is the bond's yield to maturity?
Business
1 answer:
olga55 [171]3 years ago
7 0

Answer:

3.5%

Explanation:

the yield to maturity of a zero coupon bond is calculated using the following formula:

YTM = (face value / current market value)¹/ⁿ - 1

YTM = ($100 / $70.89) ¹/¹⁰ - 1 = 3.5%

the way you can check if your calculations were correct is to find the future value of the bond using the YTM = $70.89 x (1 + 3.5)¹⁰ = $99.997 ≈ $100

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First, think about the way in which interest on municipal bonds is treated from a federal income tax point view. In this light,
spin [16.1K]

Answer:

4% (exactly 4.4%)

Explanation:

A taxable bond is a debt security whose return to the investor is subject to taxes at the local, state or federal level, or some combination thereof. An investor trying to decide whether to invest in a taxable bond or tax-exempt bond should consider what s/he will have left in income after taxes are taken.

Step 1:

Find the reciprocal of your tax rate,

(1-22%) = 1-0.22 = 0.78

Step two:

Divide this into the yield on the tax-free bond to find out the tax-equivalent yield.

3.5/0.78 = 4.4 ~ 4%

7 0
3 years ago
Airbnb rents spaces that previously would have been unused to generate revenue, while also dramatically increasing the potential
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This business uses a Peer-to-peer technique

Explanation:

P2P is a shared application framework which separates the tasks or workload from each other (partitioning tasks or workloads). Participants in the program are equally qualified and fit. It is called a system of nodes peer to peer.

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4 0
3 years ago
Assume a firm faces these costs: total cost of capital $4,000; price paid for labor = $20 per labor unit; and price paid for raw
insens350 [35]

Answer:

A) total cost = (200 labor hours x $20) + (500 units of raw materials x $8) + $4,000 cost of capital = $12,000

average total cost per unit = $12,000 / 2,000 units = $6 per unit

B) new total cost = (100 labor hours x $20) + (500 units of raw materials x $8) + $4,000 cost of capital =  $2,000 + $4,000 + $4,000 = $10,000

average total cost per unit = $10,000 / 3,000 units = $3.33 per unit

C) When process innovation occurs, total productivity and efficiency increase, decreasing the average cost per unit. In this case the total cos decrease, but even if total costs do not decrease, higher efficiency and productivity can be achieved by production more units at the same total costs. Process innovations, usually related to new technologies, are responsible for the greatest increases in productivity and efficiency which result in higher economic output and growth.

7 0
4 years ago
A company reports merchandise inventory on December 31 at $250,000 but LCM applied to items is $200,000.Record the journal entry
ahrayia [7]

<u>Solution:</u>

In order to record the merchandise inventory on LCM with the correct amount, the following Journal entry will be passed in the books of account:

Date account and explanation                               debit      credit

Dec 31 The cost of goods sold (250000-200000)     50000  

Merchandise inventory                                                      50000

(To record inventory on LCM)  

Therefore, the cost of goods sold will be debited with an amount of $50000 and the Merchandise inventory will be credited with the same amount of $50000.

4 0
3 years ago
A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which divident opti
yan [13]

Reduction of premium payment would be chosen.

This enables the policyholder to deduct policy dividends from the premium for the next year. Consequently, it will be simpler for the policyholder to pay her subsequent premium.

<h3>What is a dividend?</h3>

A dividend is a cash paid to you by your life insurance provider. This typically signifies that you have a participating policy contract, commonly known as a whole life insurance policy that pays dividends. You receive dividend payments from that company when it is profitable, rewarding your investment. You have the option of receiving this money through dividend options.

<h3>Converting Your Dividend Into Premium</h3>

This dividend option for life insurance is quite simple. If selected, your insurance provider will just use your payout to cover all or a portion of your yearly payment. If you select this option and your dividend is greater than your premium, you might also need to select a secondary alternative. On the other hand, you will need to make the remaining payments as usual if your dividend is less than your premium.

You must begin paying your premium on an annual basis if you decide to use your payout toward it. For instance, you would still need to pay the remaining $6,500 all at once if your annual premium was $8,000 and your dividend was $1,500. You may pay more or less of your premium each year depending on how the dividends change over time.

Learn more about reduction of premium here:

brainly.com/question/13237769

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7 0
2 years ago
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