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statuscvo [17]
3 years ago
9

Ponzi Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.1 percent, and a current price of $1,038. The

bonds make semiannual payments. What must the coupon rate be on these bonds?
Business
1 answer:
Dmitriy789 [7]3 years ago
3 0

Answer:

Coupon rate is 6.5%

Explanation:

Bond price is the sum of present value of coupon payment and face value of the bond. If the price is available the coupon payment can be calculated by following formula

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

$1,038 = C x [ ( 1 - ( 1 + 6.1%/2 )^-14.5x2 ) / 6.1%/2 ] + [ $1,000 / ( 1 + 6.1%/2 )^14.5x2 ]

$1,038 = C x [ ( 1 - ( 1 + 0.0305 )^-29 ) / 0.0305 ] + [ $1,000 / ( 1 + 0.0305 )^29 ]

$1,038 = C x [ ( 1 - ( 1.0305 )^-29 ) / 0.0305 ] + [ $1,000 / ( 1..0305 )^29 ]

$1,038 = C x [ ( 1 - ( 1.0305 )^-29 ) / 0..0305 ] + [ $1,000 / ( 1.0305 )^29 ]

$1,038 = C x 19.068 + $418.42

$1,038 - $418.42 = C x 19.068

$619.58 = C x 19.068

C = $619.58 / 19.068

C = $32.49

Coupon rate = 32.49 / $1,000 = 3.25% semiannual

Coupon rate = 3.25% per semiannual x 2 = 6.5% per year

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Gala2k [10]

Answer:

$136,539.57

Explanation:

The present value of the project can be determined by using the cfj function of a Financial calculator as follows :

$0 CF0

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5 0
2 years ago
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maria [59]

Answer:

some goods aren't internationally traded

Explanation:

Purchasing power parity is most popularly known as the PPP. It may be defined as the measure of the prices of the various countries which makes use of the price of some specific goods in order to compare the absolute purchasing capability or power for the countries' currencies.

It is used to measure and compare prices at different locations.

The purchasing power does not hold good in the short to the medium run as different countries produces different goods and as such all the goods are not internally traded all over the locations or countries.

8 0
2 years ago
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Illusion [34]

Answer:

True

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7 0
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Colt1911 [192]

Answer:

b. Allow the parties to rescind the contract

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Flo enters into a contract with Global Shipping Ltd. to insure and ship a painting from France to the United States at a certain amount mentioned in the contract. However, Global Shipping Ltd. makes a mistake in calculating the costs. As a result, a contract price is equal to the amount that is $1,000 less than the true cost. Most likely, a court would allow the parties to rescind the contract.

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