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Vadim26 [7]
3 years ago
11

Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 7.4% with semiannual payments of

$37, and a par value of $1,000. The price of each bond in the issue is $1,200.00. The bond issue is callable in 5 years at a call price of $1,074.
What is the bond's current yield? Round your answer to two decimal places. Do not round intermediate calculations.
Business
1 answer:
frutty [35]3 years ago
5 0

Answer:

Current yield is 6.17%

<em>YTD is 5.43%</em>

<em>YTC is 4.26%</em>

Explanation:

Tenor: 15 years

-> number of payment (NPer) is 30 (= 15 years * 2 for semiannual)

Coupon rate: 7.4%

- > semiannual payments (PMT): $37 = ($1000*7.4%/2)

Future value (FV): $1000

Present value (PV): $1200

Current yield = annual coupon/ current price = $37*2/$1200 = 6.17%

<u>Extra: </u>

We use excel to calculate  yield to date (YTD) or nominal yield:

= Rate(Nper, PMT, - PV,FV) = Rate(30,37,-1200,1000) = 2.717% semiannual

-> annual rate is 5.43%

The bond issue is callable in 5 years at a call price of $1,074, then FV is $1074

Yield to call = rate(10,37,-1200,1074) = 2.13% semiannual

-> annual rate is 4.26%

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Answer:

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sergey [27]

Behavioral questions are that type of questions in which The purpose of this class of interview questions is to learn about the personal attributes of the interviewee.

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Xia Co. currently buys a component part for $5 per unit. Xia believes that making the part would require $2.25 per unit of direc
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Answer:

Xia Co.

1-a. The relevant costs for Xia Co. to make or buy the part:

Direct materials         $2.25

Direct labor                   1.00

Incremental overhead 0.75

Total relevant cost   $4.00

1-b. Xia should make the part.  It will cost Xia $4.00 to make the component while it costs it $5.00 to buy.  It should therefore, make the component.

Explanation:

a) Data and Calculations:

Price of buying component = $5

Cost of making component:

Direct materials         $2.25

Direct labor                   1.00

Incremental overhead 0.75

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8 0
3 years ago
A politician in a small town notices that many citizens in the town cannot find work. In order to assist these individuals in fi
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Answer:

b. The goals of the politician and the goals of the job seekers would not be aligned, since unemployed individuals would have a stronger incentive to remain unemployed

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