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Serhud [2]
4 years ago
12

A U.S. Treasury bill with 157 days to maturity is quoted at a discount yield of 2.62 percent. Assume a $1 million face value. Wh

at is the bond equivalent yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)
Business
1 answer:
cupoosta [38]4 years ago
5 0

Answer:

2.76%

Explanation:

Discount yield = ((Par Value - Price) / Par Value) * (365 / d) * 100

Price =Par value - {(Discount yield × Par Value × d)/ (365 × 100) }

price =1,000,000 - { (2.62 × 1,000,000 × 157)/36,500} = $988,730

Bond Equivalent Yield = ((Par Value - Price) / Price) * (365 / d) * 100

d is days of maturity

BEY =( (1,000,000 - 988,730)/988,730) × (365/157) × 100 = 2.76%

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3 years ago
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3 years ago
Nichols Corporation's value of operations is equal to $600 million after a recapitalization (the firm had no debt before the rec
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Answer:

The answer is $750 millions

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Value of Operations = Weight of Debts x Value of Debts + Weight of Equity Capital x Value of Equity Capital

Because Nichols Corporation's value of operations is equal to $600 million after recapitalization, we have the following equation with S as the value of equity after the recap:

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3 years ago
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