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Semmy [17]
3 years ago
15

A bond with a $1,000 face value and an 8 percent annual coupon pays interest semiannually. The bond will mature in 15 years. The

nominal yield to maturity is 11 percent. What is the price of the bond today?
Business
1 answer:
Nimfa-mama [501]3 years ago
4 0

Answer:

The price of the bond today is $784.27

Explanation:

Face value (FV): $1000

Coupon rate: 8% -> counpon received annually (PMT) is $80 (= $1000 * 8%)

Tenor: 15 years

YTM: 11%

Present value = Future Value/ (1+ YTM)^tenor

We can use excel to calculate Present Value of annual payment = PV(Rate,tenor,-PMT) = PV(11%,15,-80) = $575.27

The price of bond today = present value of face value + present value of coupon received annually

= 1000/(1+11%)^15+ 80/(1+11%)^15 + 80/(1+11%)^14+.... +80/(1+11%)^1

= 1000/(1+11%)^15 + $575.27

= $784.27

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The real risk-free rate is the increment to purchasing power that the lender earns in order to induce him or her to forego curre
galben [10]

Answer: True

         

Explanation: In simple words, real risk free rate refers to the rate than a borrower can actually get in the market for a specified amount and for a specified period.

Real risk free rate is seen as a measure of how the economy of a country is performing and is calculated by subtracting the inflation rate from the treasury bonds of the govt. which match the durability of the borrower.

   It depicts the actual increase in purchasing power as it deducts the impact of inflation over time. Thus, the given statement is true.

6 0
3 years ago
Options for attacking the high costs of items purchased from suppliers do not include Multiple Choice pressuring suppliers for m
solniwko [45]

Answer:

raising prices to customers (in order to cover the high costs).

Explanation:

Supply-side economist can be defined as economists who believes that the ability and willingness of the producers of goods and services to manufacture or produce sets the pace for the economic growth of a country.

This ultimately implies that, increasing the supply of goods and services would cause an economic growth for a country.

Options for attacking or mitigating the high costs of items purchased from suppliers do not include, the seller such as a retailer raising prices to customers in a bid to cover the high costs incurred from the supply.

However, the seller could pressure his or her supplier to lower the cost, switch to a cheaper substitute products, and creating a collaborative effort with the supplier for mutual cost-saving opportunities in the market.

4 0
3 years ago
Coat's product manager continues to perform well in the market. However, a competing product is coming on strong and is looking
VLD [36.1K]

Increase the promotion budget to gain greater awareness

Explanation:

  • Coat's manager continues to perform well in the market competing product as strong and is looking to take over the market share leader in segment.
  • The coat product manger in order to improve the buying criteria, and thus potentially increase demand the best product manager should purchased.
  • Marketing and promoting  is a strategy in which one can communicate the customers and target prospective customers to buy the products.
  • Thus increasing the demand of the product and thereby increase the promotion budget and gain greater awareness.
6 0
3 years ago
Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 480 units that cost $6
Whitepunk [10]

Answer:

The cost of ending inventory is $24314.

Explanation:

Under the average cost method, the inventory is valued at the average cost of all the inventory that is available from the start of the month and the purchases made.

The average cost of inventory can be calculated by summing up the total cost of beginning inventory and purchases and dividing it by the total number of units available for sale.

Average cost per unit = [ 480*65 + 720*68 + 360*70 ] / [480 + 720 + 360]

Average cost per unit = 67.538 rounded off to $67.54 per unit

The total inventory available for sale = 480+720+360 = 1560 units

The ending inventory in units = 1560 - 1200 = 360 units

The cost of ending inventory = 360 * 67.54 = $24314.4 rounded off to $24314

5 0
4 years ago
Erin works at a financial institution. She has offered a housing loan to a customer. While carrying out the transaction, which l
Neko [114]

Answer:

D. ensure that she credits the loan amount accurately to the customer’s account

Explanation:

Erin needs to address this legal responsibility, and "arranging an informal meeting with the customer" is not a legal responsibility. Similarly, C is not a legal responsibility, and in fact, it is a crime. And E is not a legal responsibility. These details are not being given at the time of sanctioning the loan. However, D is certainly a legal responsibility as Erin needs to ensure that she credits the loan amount accurately to the customer's account.

6 0
3 years ago
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