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Arte-miy333 [17]
3 years ago
7

A convertible bond is selling for $800. It has 10 years to maturity, a $1000 face value, and a 10% coupon paid semi-annually. Si

milar nonconvertible bonds are priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $31.375 per share. Determine the bond's option premium.
Business
1 answer:
Daniel [21]3 years ago
7 0

Answer:

The bond's option premium is $11.88

Explanation:

Acording to the data we have the following:

The Maturity Value of Bond=$1000

The Coupon Rate = 10%

Hence, there is an interest of $100 Per year but it is semi anually , Therefore there is an interest of $50 received per year .

Also, the YTM = 14% , which means 7% for 6 months

Therefore, to calculate the  bond's option premium, we have to use first the formula to calculate the fair value of bond.

The Fair Value of Bond = PVAF( 7% , 20 )*50 + PV( 7% , 20 )*1000

                                       = 50*10.594 + 1000*0.2584

                                       = $529.70 + $258.419

                                      =$788.119

Hence, The bond's option premium = $800 - $788.119 = $11.88

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disa [49]

Answer:

sales tax = 8.2 %

base value  = 25%  increase

Explanation:

given data

bought = $15.25

final bill = $16.50

to find out

the sales tax rate

solution

we take tax rate and divide by original price tat is

take rate is = 16.50 - 15.25 = $1.25

so

sales tax = \frac{1.25}{15.25}

sales tax = 8.1967 %

so correct option is 8.2%

and

we consider height of Redwood tree =  x feet

and  height of Oak tree = y feet

so that difference in height of two trees  are  = change in height from Oak tree to Redwood tree is

difference in height of two trees = | x - y |

so that % change height Oak tree to Redwood tree

thus % change height from Oak tree to Redwood tree taking

so that  

Oak tree as base value will be

base value = \frac{(x-y)}{b} × 100

base value  = \frac{(120 -150) }{120} × 100

base value  = 25%  increase

7 0
3 years ago
Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:__________________
HACTEHA [7]

Answer:

The correct answer is

B) Items that require adjusting entries.

good luck ❤

3 0
3 years ago
Texas Inc. has 8,000 shares of 6%, $125 par value cumulative preferred stock and 83,000 shares of $1 par value common stock outs
vesna_86 [32]

Answer:

the annual dividend on the preferred stock is $60,000

Explanation:

The computation of the annual dividend on the preferred stock is shown below:

= Number of shares × par value per share × dividend percentage

= 8,000 shares × $125 × 6%

= $60,000

Hence, the annual dividend on the preferred stock is $60,000

We simply applied the above formula and the same is relevant

8 0
3 years ago
Vaughn Company has the following securities in its investment portfolio on December 31, 2020 (all securities were purchased in 2
vlabodo [156]

Answer:

Anderson Co. 3,100 shares at $18 per share

Munter Ltd. 10,200 shares at $57 per share

King Co. 5,600 preferred stock at $42 per stock

a. Prepare the entry for the security sale on January 15, 2021.

  • Dr Cash 58,880
  •     Cr Investment in Anderson Co. stock AFS 52,200
  •     Cr Realized gain on stock AFS 6,680

b. Prepare the journal entry to record the security purchase on April 17, 2021.

  • Dr Investment in Castle's stock AFS 38,160
  •     Cr Cash 38,160

c. Compute the unrealized gains or losses.

  • unrealized gain = $40,800 (gain in Munter) - $11,200 (loss in King) - $13,960 (loss in Castle) = $15,640

d. Prepare the adjusting entry for Vaughn on December 31, 2021.

  • Dr Investment in Munter's stock 40,800
  •     Cr Investment in King's stock 11,200
  •     Cr Investment in Castle's stock 13,960
  •     Cr Unrealized gain - other comprehensive income 15,640

 

4 0
3 years ago
Local optimization is a supply-chain complication best described as: Select one: a. the opposite of the bullwhip effect. b. opti
tia_tia [17]

Answer:

letter b is correct.<em> Optimizing one's local area without full knowledge of supply chain needs. </em>

Explanation:

For supply chain management to be optimally optimized, global scope information is needed to make decision-making more secure. Information technology can be a good solution for providing relevant information that will help integrate supply chain components to help you make decisions and meet specific local area and supply chain needs.

5 0
4 years ago
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