1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
valina [46]
4 years ago
14

Assume that you wish to purchase a bond with a 30-year maturity, an annual coupon rate of 10 percent, a face value of $1,000, an

d semiannual interest payments. If you require a 9 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
Business
1 answer:
Vladimir [108]4 years ago
4 0

Answer:

present value of the bond discounted at 9% $1,103.19

Explanation:

We will calcualte the present value of the coupon payment and the maturity of the bonds a t the 9% market rate to know the present value of the bonds.

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

Cuopon payment: 1,000 x 10% /2 = $50 per payment

time 30 years x 2 payment per year = 60

rate 9% annual /2 = 4.5% semiannual = 0.045

50 \times \frac{1-(1+0.045)^{-60} }{0.045} = PV\\

PV $1,031.9011

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time        60

rate  0.045

\frac{1000}{(1 + 0.045)^{60} } = PV  

PV   71.2890

PV coupon payment $1,031.9011

PV maturity                       $71.2890

Total                          $1,103.1901

You might be interested in
Ryan, a professional bass fisherman, is trying to determine which lure is most effective on wakeby lake—the plastic worm he norm
alexandr402 [8]

The answer is<u> "The plastic worm".</u>

A plastic worm (or trout worm) is a plastic fishing lure, for the most part made to recreate a night crawler. Plastic worms can convey an assortment of shapes, hues and sizes, and are produced using an assortment of engineered polymers.  

The Plastic Worm is the Best Single Bait for Catching the Most Fish, for the Most People, Most Consistently, as per proficient anglers. Experts have said that no other bait gives the fisher a superior opportunity to get angle. This end is bolstered by reports that the Plastic Worm has assumed a part in more competition wins than some other trap or bait.  


8 0
4 years ago
question content areause this information for pierce company to answer the following question.on may 1, pierce company purchased
Marina86 [1]

On May 1, Pierce Company purchased $60,000 of Stanton Company's 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its first semiannual interest. On February 1, Pierce sold $50,000 of the bonds at 103 plus accrued interest.

The journal entry Pierce will record on February 1 will include the total proceeds from the February 1 sale credit to Gain on Sale of Investments for $1,500

(this would also include a

Dr: Cash for $51,500

Cr: Investment-Stanton Company for $50,000)

Interest is the monetary fee for the privilege of borrowing money, usually expressed as an annual rate (APR). Interest is the amount a lender or financial institution receives for lending money.

In finance and economics, interest is a payment made by a borrower or deposit-taking financial institution to a lender or depositor in excess of the repayment of principal at a specified rate. It is different from a fee that a borrower can pay to a lender or a third party. Interest is usually given as an annual percentage of the loan amount. This percentage is called the interest rate on the loan. For example, if you deposit money in a savings account, the bank will pay you interest. Banks pay you to hold your money and use it to invest in other transactions.

Learn more about   interest here

brainly.com/question/25793394

#SPJ4

5 0
2 years ago
Prompt<br> What are equity investments ?
bulgar [2K]

Answer:

In finance, equity is the ownership of assets that may have debts or other liabilities attached to them. Equity is measured for accounting purposes by subtracting liabilities from the value of the assets.

Explanation:

got 100%

7 0
3 years ago
What current treaty defines the legal relationship between airlines and international passengers, outlining what the airline is
kari74 [83]

Answer: The Montreal Convention 1999 (MC99)

Explanation:

The Montreal Convention of 1999 (MC99) unified all different international treaties that were in force with regards to Airline liability since 1929.

Designed as a single, universal treaty meant to govern airline liability across the globe, it established airline liability in the case of death or injury to passengers, as well as in cases of delay, damage or loss of baggage and cargo.

The United States of America RATIFIED the Agreement on the 5th of September 2003 after it passed the Senate in July of the same year. It then came into effect 60 days later on the 4th of November 2003.

6 0
3 years ago
Read 2 more answers
Which of the following refers to business activities that change the accounting equation?
lys-0071 [83]

Answer:

A

Explanation:

6 0
4 years ago
Other questions:
  • In making estimates, its Important to understand rounding
    10·1 answer
  • Cynthia Knott's oyster bar buys fresh Louisiana oysters for $5 per pound and sells them for $9 per pound. Any oysters not sold t
    10·1 answer
  • Which of these places has a high GDP, a high GDP per capita, AND extremely high wealth disparity? Select one: a. The USA b. Equa
    14·1 answer
  • The cyclical surplus is $450 billion, potential output is $10 trillion and tax rate is 15 percent. With this information, we can
    8·1 answer
  • Foot Locker, Inc., is a large global retailer of athletic footwear and apparel selling directly to customers and through the Int
    7·1 answer
  • Item8 1 points Time Remaining 18 minutes 53 seconds 00:18:53 Item 8Item 8 1 points Time Remaining 18 minutes 53 seconds 00:18:53
    15·1 answer
  • Journalize the entries to correct the following errors: a. A purchase of supplies for $115 on account was recorded and posted as
    10·1 answer
  • By identifying and investing early in a potential future economic star, international firms can ________ and gain experience in
    11·1 answer
  • During the busiest season of the year, your customer support center receives a higher call volume than planned. However, you can
    9·1 answer
  • Hiiiiiii Gary you know who you are aka my friend
    14·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!