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konstantin123 [22]
3 years ago
10

n investor purchased the following five bonds. Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase da

y. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates
Business
1 answer:
Vilka [71]3 years ago
3 0

Answer:

14.29%

Explanation:

An investor purchased the following five bonds.

Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase day.

Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%.

What is the percentage change in price for each bond after the decline in interest rates

Generally, the relationship can be expressed as interest rate = Coupon Payment / Face Value.

At purchase coupon rate = $80/$1000 = 8%

Thereafter coupon rate = $80/Revised bond price = 7%

Solving as : Revised bond price x 0.07=  $80

Revised bond price = $80 / 0.07 = $1,142.85

Therefore % change in bond price = [($1,142.85 - $1000) / $1000] x 100 = 14.29%

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UkoKoshka [18]

Answer:

The present value is $395,354.84

Explanation:

The computation of the Present value is shown below

= Present value of all yearly cash inflows after applying discount factor

The discount factor should be computed by

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where,  

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Year = 0,1,2,3,4 and so on

Discount Factor:

For Year 1 = 1 ÷ 1.0725 ^ 1 = 0.9324

For Year 2 = 1 ÷ 1.0725 ^ 2 = 0.8694

For Year 3 = 1 ÷ 1.0725 ^ 3  = 0.8106

For Year 4 = 1 ÷ 1.0725 ^ 4  = 0.7558

For Year 5 = 1 ÷ 1.0725 ^ 5  = 0.7047

For Year 6 = 1 ÷ 1.0725 ^ 6  = 0.6571

For Year 7 = 1 ÷ 1.0725 ^ 7  = 0.6127

So, the calculation of a Present value of all yearly cash inflows are shown below

= (Year 1 cash inflow × Present Factor of Year 1) + (Year 2 cash inflow × Present Factor of Year 2) + (Year 3 cash inflow × Present Factor of Year 3) + (Year 4 cash inflow × Present Factor of Year 4)  + (Year 5 cash inflow × Present Factor of Year 5)  + (Year 6 cash inflow × Present Factor of Year 6)  + (Year 7 cash inflow × Present Factor of Year 7)

= ($74,000 × 0.9324 ) + ($74,000 × 0.8694  ) + ($74,000 × 0.8106 )  + ($74,000 ×  0.7558 )  + ($74,000 × 0.7047  ) + ($74,000 × 0.6571 )  + ($74,000 × 0.6127  )

= $68,997.67  + $64,333.49  + $59,984.61  + $55,929.70  + $52,148.91  + $48,623.69  + $45,336.77

= $395,354.84

We take the first four digits of the discount factor.  

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Learn more about stock market prediction here: brainly.com/question/690070

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<h3>What is the postsynaptic neuron?</h3>

Postsynaptic neurons are the neurons that take receipt of the triggers from the synapse. The synapse is responsible for generating and transmitting electrical signals.

Thus, it is right to state that if neuron L is repeatedly stimulated very rapidly, The expected changes in the postsynaptic neuron are:

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Learn more about the postsynaptic neuron at:

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