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swat32
3 years ago
7

Bond Features Maturity (years) 5 Face Value = $1,000Coupon Rate = 5.00%Coupon dates (Annual) Market interest rate today 5.00%Tim

e to call (years) 3 Price if Called $1,050.00Market interest rate in Year 3 is 2.00% The above bond is callable in 3 years. When the bond is issued today, interest rates are 5.00% . In 3 years, the market interest rate is 2.00% . Should the firm call back the bonds in year 3 and if so, how much would the firm save or lose by calling back the bonds? a. yes it should call back the bonds, it will save $8.25b. yes it should call back the bonds, it will save $7.83c. no it should not call back the bonds, it will lose $7.83d. yes it should call back the bonds, it will save $8.49e. no it should not call back the bonds, it will lose $8.25f. no it should not call back the bonds, it will lose $8.49
Business
1 answer:
german3 years ago
5 0

Answer:

it should call back the bonds as it will save $8.25

Explanation:

Bond Price can be calculated using PV function. After 3 years,

N = 2, PMT = 5% x 1000 = 50, FV = 1000, I/Y = 2%

=> Compute PV = $1,058.25

Without the call option, the bond would be worth $1,058.25. But the firm can buy those bonds at $1,050.

Hence, it should call back the bonds as it will save $8.25

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Match each type of tax with an example of its use.
Fofino [41]

<u>Answer:</u>

Excise tax              :$0.30 tax on a gallon gasoline

Consumption tax  : 20% tax on wages earned

Income tax            : 9% tax on the sale of luxuries

<u>Explanation:</u>

Excise tax are the taxes charged to individuals on purchase of certain goods. Excise taxes are included with the price of the product. One of the major excise tax is charged on the gasoline for vehicles.

Consumption tax are the indirect taxes that are charged on usage of goods and services. They are collected in the form of sales tax and value added tax.

Income tax is the tax collected by the government for earning money through business or work.

8 0
2 years ago
For every problem-solving activity it is crucial that no less than five alternatives be considered.
jok3333 [9.3K]

Answer:

true

Explanation:

beacause

5 0
2 years ago
Describe the events that occur in an efficient market in response to new information that causes the expected return to exceed t
nadya68 [22]

Answer:

The efficient market hypothesis tells, in an equilibrium, the price of stocks or security is an unbiased estimate of the true values.

Explanation:

  • Thus, in the equilibrium,  of security prices are neither an overvalued nor are undervalued. Suppose the investors learn new information about the company that suggests there stock is worth more than the current price.  
  • The security gets undervalued expected return exceeds the required return. Increased in demand for security from the investors with this new information will thus bid up the market value plus reduce its expected return until they are equal.

7 0
3 years ago
Forbes, fortune, and similar types of magazines often contain ads for rolex watches, bmw automobiles, and other luxury items. ad
MatroZZZ [7]
This is based on income. Income segmentation is when the consumers are segmented as per the yearly or regular income they are making. Income segmentation is best suitable for merchandises which are very exact, position and are valued high. It helps businesses to comprehend the relation between the making of a customer, the value being vacant by the company and the number of possible customers that a business can have.
7 0
3 years ago
In January of 2015, the appropriate construction cost index had a value of $3,260. In January of 2005, the value was $1,746. In
Dennis_Churaev [7]

Answer:

11.63 million dollar

Explanation:

In 2005 the construction cost index was 1746 , in 2015 , it was 3260.

change in index in 10 years  = 3260-1746 = 1514

change in 5 years ( estimated ) = 757

Estimated index in 2010 = 1746 + 757

= 2503

Estimated index in 2020  = 3260 + 757

= 4017

Value of building in 2010 = 1746 million dollar

Value of similar building - X

X / 1746 = index in 2020 (probable ) / index in 2010

X / 7.25 = 4017 / 2503

X = 11.63 million dollar

8 0
2 years ago
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