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Vanyuwa [196]
3 years ago
5

Calculate the price of a 5.2 % coupon bond with 18 years left to maturity and a market interest rate of 4.6 %.(Assume interest p

ayments are semiannual.)
Do not round intermediate calculations and round your final answer to 2 decimal places
Is this a discount or premium bond?​
Business
1 answer:
cupoosta [38]3 years ago
7 0

Answer:

Bond is selling at Premium

Explanation:

It is common for bond valuation if coupon rate is greater than market interest rate than bond is selling at premium.

Suppose

Bond = $1000

Coupon rate = 5.2% / 2 = 2.6%

Market interest rate = 4.6% / 2 = 2.3%

No of year = 18 x 2 = 36 Years

using PVIFA and PVIF table value coupon amount and bond we can get the value of current market price.

Coupon is $1000 x 2.6% = $26

Par Value of bond = $1000

Using PVIFA & PVIF table at 2.3% we get the following figures.

$ 26 x 24.3026 = $631.87

$ 1000 x 0.4410 = $441.04

Current market value of bond = $1072.91

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I’m guessing the answer is D
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2 years ago
A company purchased 10 units for $5 on January 3. It purchased 10 units for $7 each on February 28. It sold 10 units on March 1.
NeTakaya

Answer:

The dollar amount for ending inventory using the last-in-first-out method of inventory valuation is $50

Explanation:

Using LIFO,last-in-first-out  method of inventory valuation,items received last into the store are deemed to be sold first, hence the sales of 10 units on March 1 was the inventory purchased on February 28, leaving the items of inventory purchased on January 3 as closing inventory

value of closing inventory using LIFO=10*$5=$50

3 0
2 years ago
A 10-year semi-annual coupon bond with an $1000 par value pays an annual coupon rate of 6% and the market requires 8% APR. What
arlik [135]

Answer:

Coupon= $30 per period.

20 period for semi annual coupon payment.

28.148% discount rate

Explanation:

1.) Coupon rate * face value of bond = coupon

semi annual rate =6%/2=3%

Coupon= 1000 *3%= $30 per period.

2.) t= number of periods = years of maturity * coupon payment semi-annual

t= 10 * 2 = 20 periods.

3. Discount rate formula =C+[(F-P)/t] / (F+P/2)

where C=coupon payment annual

F= face value of security

P=price of security= 1000 *8%=80

t= years of maturity.

so we have⇒ 60+[(1000-80)/10]/(1000+80)/2

=152/540

=28.148%

4 0
3 years ago
Robert bought 10 shares of Apex Company for $18 each and later sold all of them at $17 each. This transaction resulted in what t
ikadub [295]

Answer:

capital loss

Explanation:

3 0
3 years ago
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Luda [366]

Answer:

No, we can’t say

Explanation:

In this question, we are asked to decide if we can say that Guatemala’s standard of living grew more than that of the US’ standard of living between the years 1993 and 2003 given the pointers in the question.

We cannot say that this is correct because of the following reasons;

As observed from the question, the US growth rate was calculated between the years 1948-2003, which is indicative of a 55 year span. Now, comparing this with that of Guatemala, we can see that the span here is just 10 years I.e from 1993 to 2003.

Also, we were not provided with the population growth rate in both countries and this makes it difficult to judge which of the two countries have a better growth in terms of standard of living

5 0
2 years ago
Read 2 more answers
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