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timofeeve [1]
3 years ago
14

Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be

called in 6 years at a price of $1,065 and it sells for $1,200. What is the bond's nominal yield to maturity
Business
1 answer:
ANEK [815]3 years ago
3 0

Answer:

10%

Explanation:

This can be calculated using the nominal yield to maturity (YTM) formula as follows:

Yield to maturity = [C + ((F - P) / n)] / [(F + P) / 2]  ........ (1)

Where;

F = Face or par value = $1,000

C = Coupon or interest payment = $1,000 * 13% = $130

P = quoted price = $1,200

n = Years to maturity = 10

Substituting the values into equation (1), we have:

Yield to maturity = [130 + ((1,000 - 1,200) / 10)] / [(1,000 + 1,200) / 2]  = 0.10, or 10%.

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In order to calculate What daily order quantity is optimal, we have to calculate first The cost of underestimating the demand Cu and cost of overestimating demand Co

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