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Makovka662 [10]
4 years ago
10

A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two-year debt is 0

.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value
Business
1 answer:
nekit [7.7K]4 years ago
8 0

Answer:

$105.34

Explanation:

Given:

  • Face value:  $100
  • Coupon rate of 6.7% semiannually = 6.7%/2 = 3.35% (semi-annually)

=> Coupon payment: $100*3.35% = $3.35

  • Nper: 2*2 =4
  • Yield to maturity is : 3.1% + 0.8% = 3.9%/2 = 1.95% (semi-annually)

Using present value formula in excel

pv=(rate,nper,pmt,fv)

pv = (1.95%, 4, 3.35,100)

pv = $105.34

The price of the firm's outstanding two-year bonds be per $100 of face value is:  $105.34

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Answer:

B. large amount of natural resources

Explanation:

Comparative advantage is a country's ability to produce a product or service for a lower opportunity cost than rival countries.  Opportunity costs are the benefits given up in the extraction process. If a  country has a large amount of natural resources, it will use fewer resources in the extraction process than other countries. The trade-off costs will be so little compared to the benefits.

Other countries will find it cheaper to import from a country with large natural resources. For example, oil-rich nations have a comparative advantage in the extraction and processing of oil and oil by-products.

4 0
3 years ago
Why does an inverted yield curve serve as a predictor of a recession?.
choli [55]
An inverted curve reflects the bond market's expectation for the Fed to cut rates down the line. The Fed normally cuts rates in response to an economic downturn, hence why an inverted curve could be a recession signal.
3 0
2 years ago
Read 2 more answers
Wendy has been designated as group leader of a task force at work that just met for orientation last week. During the second mee
kipiarov [429]

Answer:

B) Storming

Explanation:

Storming  

the second stage in the team development

When the group began to contradict other views, this meant that they had crossed the first stage of formation and were now trying to cross the boundaries. This phase is the stage of the storm, which can cause group failure.  

so correct option is  B) Storming  

5 0
4 years ago
In Macroland autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, plann
Harman [31]

Answer:

b) $1,160

Explanation:

From the above information,

I=Investment = 50

G=Government expenditure = 150

X=Net export = 20

a=autonomous consumption = 100

b=Marginal propensity to consume = 0.75

Y=Equilibrium GDP

C = consumption ;

C = 100 + 0.75Y (Y income - 40 taxes)

Planned aggregate expenditure (PAE)

PAE = C + l +G +X

Substituting for C in the above equation,

PAE = 100 + 0.75 (Y - 40) + 50 + 150+ 20

= 100 + 0.75Y -30 + 50 + 150 + 20

= 290 + 0.75Y

Since short run exists when Y = PAE

Therefore,

Y = 290 + 0.75Y

Collect like terms

Y - 0.75Y = 290

0.25Y =290

Y = 290/0.25

Y = 1,160

4 0
4 years ago
The appropriate discount rate for the following cash flows is 8 percent compounded quarterly. YearCash Flow 1 $800 2 800 3 0 4 1
zalisa [80]

Answer:

Total PV= $2,298.24

Explanation:

<u>First, we need to determine the effective annual rate:</u>

EAR= [1 + (i/n)]^n - 1

EAR= [1 + (0.08/4)]^4 - 1

EAR= 0.082

<u>Now, we can determine the present value of the cash flow, using the following formula:</u>

PV= ∑[Cf/(1+i)^n]

Cf1= 800 / 1.082= 739.37

Cf2= 800 / 1.082^2= 683.34

Cf3= 0

Cf4= 1,200 / 1.082^4= 875.53

Total PV= $2,298.24

3 0
3 years ago
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