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Verizon [17]
2 years ago
8

A​ BBB-rated corporate bond has a yield to maturity of 7.7 %. A U.S. treasury security has a yield to maturity of 6.3 %. These y

ields are quoted as APRs with semiannual compounding. Both bonds pay​ semi-annual coupons at a rate of 7.3 % and have five years to maturity. a. What is the price​ (expressed as a percentage of the face​ value) of the treasury​ bond? b. What is the price​ (expressed as a percentage of the face​ value) of the​ BBB-rated corporate​ bond? c. What is the credit spread on the BBB​ bonds?
Business
1 answer:
ArbitrLikvidat [17]2 years ago
5 0

Answer:

The price as a percentage of the treasury stock is 104.23%

The price as a percentage of the BBB-rated corporate bond is 98.37%

The credit spread on the bond is 1.40%

Find detailed computations in the attached.

Explanation:

The credit spread on BBB-rated corporate bond is the difference between its effective interest rate and the interest rate on the U.S government treasury security,that is:

7.7%-6.3%=1.40%

Note that the par value of a bond is usually $1000.

Download xlsx
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stock a has an expected return of 20 and stock b has an expected return of 5. what is the expected return on a portfolio this co
OlgaM077 [116]

Answer:

15.05%

Explanation:

Calculation to determine the expected return on a portfolio

Using this formula

Expected return = (Return on stock A * Percentage invested in stock A) + ( Return on Stock B * Percentage invested in Stock B)

Let plug in the formula

Expected return= (20% * 67%) + (5% * 33%)

Expected return= 13.4% + 1.65%

Expected return= 15.05%

Therefore the expected return on a portfolio is 15.05%

6 0
3 years ago
Describe the effect of technology as it relates to structural unemployment and technological unemployment
nignag [31]

Structural unemployment is aggravated and reduced by technology depending on the sector and advancements coming with it.

Explanation:

Technology has been responsible for the increase and decrease in structure unemployment which in simple terms means technology has given and taken people's jobs.

This is because technology changes an industry fundamentally. The people who are replaced by self serve robots loose their jobs but many gain the jobs of handling the new installed equipment like this in companies.

This leads to the point of technological unemployment which means that some people remain unemployed because they do not have certain technical knowledge which is unfortunate for many from lower classes.

7 0
2 years ago
Last year Electric Autos had sales of $100 million and assets at the start of the year of $150 million. If its return on start-o
Alik [6]

Answer:

22.5%

Explanation:

If Electric Autos had a 15% return on start-of-year assets, and its assets at the start of the year were $150 million, the company's total profit is given by:

P = 0.15*\$150\\P=\$22.5\ million

If sales amounted to $100 million, the profit margin (M) is determined as:

M = \frac{\$22.5}{\$100}\\ M=22.5\%

Electric Autos had a profit margin of 22.5%

5 0
3 years ago
Read 2 more answers
Your​ co-worker is about five years away from retirement and she is feeling fairly​ risk-averse. She wants to make sure she pres
dmitriy555 [2]

Answer:

Balanced mutual fund

Explanation:  

Balanced mutual fund -

These type of mutual funds , inverts in more types of assets , like the bonds and stocks , for an objective like aggressive or moderate .

There a lot of balanced funds options available in the market , having a the types -

1.  passively managed

2.  actively managed .

The mutual funds which the investor can hold on for a long duration i.e. for a decade or so , are the best type of mutual funds .

4 0
2 years ago
A ________ externality exists when the number of customers who purchase a good or use it influences the quantity demanded.
aleksandrvk [35]

Answer: network

Explanation:

Network externality simply states that demand for a good or service has to do with how other people demand for that particular good or service. It means consumer's buying patterns are influenced by the purchase of others buying the product.

Therefore, a network externality exists when the number of customers who purchase a good or use it influences the quantity demanded.

3 0
3 years ago
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