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natita [175]
3 years ago
13

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles,

whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with five years to maturity (YTM) has a coupon rate of 3%. The yield to maturity of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
Business
1 answer:
Ostrovityanka [42]3 years ago
6 0

Answer:

Value of treasury Note =$698,494.97

Explanation:

<em>The value of the notes is the present value of the future cash inflows discounted at its YTM of 11%</em>

Value of Notes = PV of interest + PV of RV  

The value of Note can be worked out as follows:  

Step 1  :<em>Calculate the PV of Interest payment  </em>

Present value of the interest payment  

PV = Interest payment × (1- (1+r)^(-n))/r  

r-Yield to Maturity, n- number of years

Interest payment = 3% × $1,000,000 × 1/2= $15,000 .

Semi-annual interest yield = 11%/2 =5.5%  

PV = 15,000 × (1 - (1.055)^(-5×2)/0.055) = 113,064.3874

<em>Step 2   :PV of redemption Value</em>  

PV of RV = RV × (1+r)^(-n)  

= 1000,000 × (1.055)^(-5×2)  

= 585,430.57

Step 3  

<em>Calculate Value of the Notes </em>

=113,064.3874  + 585,430.57

= $698,494.96

Value of treasury Note =$698,494.97

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1 year ago
The term _____ is defined as the activity, set of institutions, and processes for creating, communicating, delivering, and excha
Temka [501]

Answer:

American Marketing Association

Explanation:

American Marketing Association -

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In the year 2012 , there were 30,000 members , present in the United states .

Which consists of 250 collegiate chapters and 76 professional chapters .

Hence from the given scenario of the question ,

The correct option is American Marketing Association .

3 0
3 years ago
If a firm has a cost of equity of 15 percent, and the firm is 100 percent equity financed. The firm is contemplating a $150 mill
Nikolay [14]

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c. $166.67 million

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Flotation costs increase the cost of equity, since they are an expense that decreases the net amount of money received by a corporation when it issued new stocks or new bonds.

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National Housing Federation establishes relationships with financial institutions to offer homeownership programs that include down payment assistance through grants and favorable terms.

<h3>What is National Housing Federation?</h3>
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