The Sisyphean Company has a bond outstanding with a face value of $ 1 comma 000 that reaches maturity in 10 years. The bond cert
ificate indicates that the stated coupon rate for this bond is 9.2% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 7.2%, then the price that this bond trades for will be closest to:
1 answer:
Answer:
$1,140.85
Explanation:
We use the Present value formula that is shown on the attachment below:
Data provided in the question
Future value = $1,000
Rate of interest = 7.20% ÷ 2 = 3.60%
NPER = 10 years × 2 = 20 years
PMT = $1,000 × 9.2% ÷ 2 = $46
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the price of the bond is $1,140.85
In semi annually, the coupon rate and the interest rate would be half whereas the time period is doubles
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Answer:
b. supply is represented graphically by a curve and quantity supplied as a point on that curve.
Explanation:
Qunatity supplied shows how qunatity of a product changes in response to changes in price of that good. According to the law of supply, the higher the price of good, the higher the quantity supplied and the lower the price of a good, the lower the quantity supplied. This shows that quantity supplied has a direct relationship with price.
Changes in quantity supplied is shown by movement along a supply curve.
Changes in supply is caused by other factors other than changes in price. Some of these factors are :
Changes in price of similar goods
Tax
Change in number of suppliers
Technological advancement
Changes in supply is shown by movement of the supply curve either to the left or to the right and not a movement along the supply curve.
I hope my answer helps you
Part a) The Cob Douglas production function is given as:
To show that this function is homogeneous with degree 3, we introduce be a parameter, t.
Using properties of exponents, we on tinder:
This implies that:
Simplify the exponent of t to get;
Hence the function is homogeneous with degree, 3
Part b) To verify Euler's Theorem, we must show that:
Verifying from the left:
Q•E•D