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Archy [21]
3 years ago
8

The yield to maturity on a bond is the interest rate you earn on your investment if interest rates do not change. If you actuall

y sell the bond before it matures, your realized return is known as the holding period yield. Suppose that today you buy a coupon bond with 9 percent annual interest for $1,000. The bond has 12 years to maturity. Three years from now, the yield to maturity has declined to 7 percent and you decide to sell. What is your holding period yield?
Business
1 answer:
koban [17]3 years ago
3 0

Answer:

The answer is 12.83%.

Explanation:

We have the below calculations:

- Coupon payment = 1,000 x 9% = $90;

- Purchasing price = $1,000;

- Price sold after 3 years is equal to the present value of 9  annual coupon payments plus face value repayment after 9 years, discounted at YTM at the time of sell at 7%;

=> Price after 3 year = (90/0.07) x ( 1- 1.07^-9) + 1,000/1.07^9 = $1,130.3;

The holding period yield (HPY) is the discount rate that equalizes cash flow from 3 years of holding the bond to its original purchased price:

1,000 = (90/HPY) x [1 - (1+HPY)^-3] + 1,130.3/ (1+HPY)^3 <=> HPY = 12.83%.

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In its 2018 fiscal year, the data storage company, NetApp Inc., reported that it had 267.9 million shares of common stock outsta
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Answer:

option (C) 8.8

Explanation:

Data provided in the question:

Common stock outstanding = 267.9 million shares

Market price = $68 per share

Value of common stock equity reported = $2.067 billion

Now,

Market value = Market price × Number of  Common stock outstanding

= $68 × 267.9 million

= $18,217.2 million

= $18,217,200,000

Book value = $2.067 billion = $2,067,000,000

therefore,

NetApp's market/book ratio = $18,217,200,000 ÷ $2,067,000,000

= 8.81 ≈ 8.8

Hence,

Answer is option (C) 8.8

8 0
3 years ago
Think of a time you encountered an ethical dilemma. What was the situation? How did you react? Do you behave ethically? How do y
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Explanation: i hope you understand

3 0
3 years ago
On June 30, 2019, bonds were issued at par with a face value of $2,000,000 and a 7% stated interest rate. Each bond has a $1,000
vagabundo [1.1K]

Answer:

The answer is "$84,000 in the numerator and 60,000 in the denominator".

Explanation:

If securities are transformed into stocks. So, the common stack holder  should be have a larger net revenue, calculation of net revenue

= \$ 2,000,000 \times 7 \% \times (1 - 0.40) \\\\=  \$ 2,000,000 \times \frac{7}{100} \times 0.6\\\\=  \$ 20,000 \times 7 \times \frac{6}{10}\\\\=  \$ 2,000\times 7\times 6\\\\=  \$ 2,000 \times 42\\\\=  \$ 84,000\\

In addition, the loads will also raise the total amount of shares which is calculated as follows:

= \frac{\$ 2,000,000}{ \$ 1,000 \times 30}\\\\= \$ 60,000  \ stocks

Formula:

\ EPS =\frac{\ net \ income}{ \ average \ number \ of \ stocks}

That's why in this question numerator is = $ 84, 000 and denominator = $ 60,000

7 0
3 years ago
Martin Services Company provides their employees vacation benefits and a defined contribution pension plan. Employees earned vac
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Answer:

Explanation:

a. Provide the journal entry for the vacation pay

Employees earned vacation pay of $39,500 for the period.

                                                       Debit                   Credit

Vacation pay expense A/C          $39,500

Vacation payable A/C                                                $39,500

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b. Provide the journal entry for the pension benefit.

9% of employee salaries and the salaries were $750,000

=> The pension plan requires a contribution to the plan administrator:  $750,000*9% = $67,500

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To cash A/C                                                                   $67,500

To unfunded pension liabilities                                   $683,500          

Hope it will find you well.        

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