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Ivahew [28]
3 years ago
7

Bond valuationlong dashSemiannual interest Find the value of a bond maturing in 4 ​years, with a ​$1 comma 000 par value and a c

oupon interest rate of 9​% ​(4.5​% paid​ semiannually) if the required return on​ similar-risk bonds is 15​% annual interest (7.5 % paid​ semiannually).
Business
1 answer:
algol [13]3 years ago
7 0

Answer:

824.28

Explanation:

Market price of a bond is the total sum of discounted coupon cashflow and par value at maturity. This is a 4-year bond with semi-annual payment so there will be 8 coupon payment in total. Let formulate the bond price as below:

Bond price = [(Coupon rate/2) x Par]/(1 + Required return/2) + [(Coupon rate/2) x Par]/(1 + Required return/2)^2 + ... + [(Coupon rate/2) x Par + Par]/(1 + Required return/2)^8

Putting all the number together, we have

Bond price = [(4.5%) x 1000]/(1 + 7.5%) + [(4.5%) x 1000]/(1 + 7.5%)^2 + ... + [(4.5%) x 1000 + 1000]/(1 + 7.5%)^8

                  = 824.28

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3 years ago
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5 0
3 years ago
Data concerning Bouerneuf Company's common stock follow:Book value oer share 24.00Market Value per share 18.00Earnings per share
natali 33 [55]

Answer:

3

Explanation:

Price - earnings ratio refers to the ratio between the Market price and the Earning per share. The formula for price - earning ratio is as follows:

Given that,

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Therefore, the price-earnings ratio would be 3.

4 0
3 years ago
A fall in the value of the dollar againstother currencies makes U.S. final goods and services cheaper toforeigners even though t
Mars2501 [29]

Answer: I am right, the increased demand represents a rightward shift of the aggregate demand curve.

Explanation:

The increase in aggregate demand by foreigners occurred as a result of a fall in the value of the US dollars and aggreagrate price level stayed the same. Therefore, the change in aggregate demand didn't occur as a result of a change in price.

If agregrate demand changed as a result of a change in the aggregate price levels, there would be a change in quantity demanded and a movement along the demand curve.

It's only a change in price that result results in a movement along the aggregate demand curve.

Other factors that leads to a change in demand either shifts the aggregate demand curve to the left or to the right.

Therefore, an increase in aggregate demand as a result of the fall in value of US dollars causes the aggregate demand curve to shift to the right.

The shift in the aggregate demand curve to the right shows that demand has increased but aggregate price hasn't changed.

5 0
3 years ago
Assuming a country's economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of l
lapo4ka [179]

Answer:

A) 30

Explanation:

to determine in how many years the economy will double with an 8% growth rate, we can use the rule of 72. The rule of 72 basically works by dividing 72 by the compounding growth rate to determine the number of years it will take an investment to double.

The rule of 72 works well when growth rate is between 6-10%, at 8% it is quite exact. For lower growth rates you should use the rule of 70 which is basically the same but instead of using 72, you use 70. For growth rates over 10% you should use 69.3.

the number of years for the economy to double = 72/8 = 9 years, so 9 plus 20 = 29 years. Since the question asks at what age the economy should have more than doubled, it would be a little over 29, and in this case it is 30.

You can always check which number is more exact calculating 1.08⁹ = 1.999

5 0
3 years ago
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