1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
lara31 [8.8K]
3 years ago
11

Oil Well Supply offers a 8 percent coupon bond with semiannual payments and a yield to maturity of 8.73 percent. The bonds matur

e in 9 years. What is the market price per bond if the face value is $1,000?
Business
1 answer:
g100num [7]3 years ago
7 0

Answer:

Market price today   $955.1347

Explanation:

To know the current market price we will calculate the present value ofthe cuopon payment and the maturity at the yield to maturity rate of 8.73%

<u>Present value of the annuity</u>

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

Cupon Payment: 1,000 face value x 8% / 2 payment per year = 40

time = 9 years x 2 payment per year = 18

rate = 8.73% = 0.0873 = 0.0873/2 = 0.04365

40 \times \frac{1-(1+0.04365)^{-18} }{0.04365} = PV\\

PV $491.6747

<u></u>

<u>Present value of the maturity</u>

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity = face value =   1,000.00

time   18.00

rate  0.04365

\frac{1000}{(1 + 0.04365)^{18} } = PV  

PV   463.46

<u>Now we add both together to get the present value of the bond</u>

PV c   $491.6747

PV m   $463.4599

Total   $955.1347

You might be interested in
Assume that the following data describe the condition of the banking system: Total reserves $100 billion Transactions deposits $
gogolik [260]

Answer:

12.5%

Explanation:

The computation of the reserve requirement is shown below:

We know that

Total reserves = New reserve requirement × transaction deposits

$100 billion = New reserve requirement × $800 billion

So, the New reserve requirement would be

= $100 billion ÷ $800 billion

= 0.125 or 12.5%

All other information which is given is not relevant. Hence, ignored it

8 0
3 years ago
Consider the following comments about absorption- and variable-costing income statements:
Lostsunrise [7]

Answer:

E) I, II, and III.

Explanation:

Variable costing can be regarded as a concept of managerial accounting cost

whereby during the period of producing the product there is incurred

manufacturing overhead.

Absorption costing income statement, utilize absorption costing when creating income statement. The income statement focus on the cost through sectioning of cost into period cost and product.

It should be noted that

I. A variable-costing income statement discloses a firm's contribution margin.

II. Cost of goods sold on an absorption-costing income statement includes fixed costs.

III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements.

7 0
2 years ago
A trader maintains a position in a small capitalization stock that has low trading volume. The trader has a high level of which
swat32

Answer:

B) Liquidity

Explanation:

Liquidity is the ability of quickly buy or sell a stock without any price change.

Liquidity in a small-capitalization stock that has low trading volume is generally low that causes a problem for traders. It is so because in small capitalization, traders are unable to understand potential pitfalls and blindly invest in small-capitalization stocks which do not give profit as expected and the liquidity becomes low.

Hence, the correct answer is B) Liquidity.

6 0
3 years ago
A part of a business's message that distinguishes it from all its competitors
stepan [7]

Answer:

Unique selling proposition.

8 0
3 years ago
Read 2 more answers
Newmark &amp; Co. Real Estate, Inc., (the broker) contacted 2615 East 17 Street Realty, LLC, (the landlord) to lease certain rea
Marta_Voda [28]

Answer: D. a promise made in consideration of a marriage

3 0
3 years ago
Read 2 more answers
Other questions:
  • __________ is setting a price for products that must be used along with a main product, such as blades for a razor and games for
    10·1 answer
  • Which of the following does not influence the consumer when he or she is deciding whether or not to buy a product?
    6·1 answer
  • Net capital outflow equals a. the value of foreign assets purchased by domestic residents - the value of domestic assets purchas
    7·1 answer
  • Which of the following would cause a shift in the demand curve loading from point A to point B?
    7·1 answer
  • Which methods predicts the amount by which the value of a firm will change if a project is accepted?
    8·1 answer
  • The cornerstone of the _____ system is one-stop service delivery, which unifies numerous training, education, and employment pro
    5·1 answer
  • What is the best questions that entrepreneurs should know before starting a business?​
    14·1 answer
  • IKEA has essentially changed the way people shop for furniture. Discuss the pros and cons of this strategy, especially as the co
    11·2 answers
  • Finance professionals make decisions that fall into three distinctive areas: corporate finance, capital markets, and investments
    7·1 answer
  • Lighting equipment listed for horticultural use and connected with flexible cord shall have outlets that are _______.
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!