g A company issues a ten-year bond at par with a coupon rate of 6.5% paid semi-annually. The YTM at the beginning of the third y
ear of the bond (8 years left to maturity) is 8.6%. What is the new price of the bond
1 answer:
Answer:
$880.31
Explanation:
Here for computing the new price of the bond we use the present value formula i.e. to be shown in the attachment
Given that,
Assuming Future value = $1,000
Rate of interest = 8.6% ÷ 2 = 4.3%
NPER = 8 years × 2 = 16
PMT = $1,000 × 6.5% ÷ 2 = $32.50
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the new price of the bond is $880.31
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Answer:
$ 29.018 ( approx )
Explanation:
The amount formula in compound interest,
Where,
P = principal amount,
r = rate per period,
t = number of periods,
Here, P = $ 3260.00,
Since, the amount is compounded monthly,
So, the number of periods in 3 months, t = 3,
Also, annual rate = 3.55 % = 0.0355,
So, the rate per month, r = (∵ 1 year = 12 months)
Thus, the amount after 3 months,
Hence, the total interest earned,
I = A - P =3289.018 - 3260 = $ 29.018
Answer:
The answer is below
Explanation:
Scientific notation is a way in which real numbers both big and small are represented in decimal form. It is represented by dividing the number into two parts in the form of a × , where 1 ≤ |a| ≤ 10 and b is to the power of ten which makes it equal to the original number.