1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Evgesh-ka [11]
3 years ago
9

AB Builders, Inc., has 22-year bonds outstanding with a par value of $2,000 and a quoted price of 106.657. The bonds pay interes

t semiannually and have a yield to maturity of 6.74 percent. What is the coupon rate
Business
2 answers:
Aloiza [94]3 years ago
6 0

Answer:

7.32%

Explanation:

<em>The price of a bond is the present of its interest payment and the present value of redemption value (RV</em>

Present value of the Redemption Value (RV) =

FV× (1+r/2)^(-2×n)

FV- 2000, r- yield rate, r/2= 6.74%/2 = 3.37%, n-22

=2000× (1.0337)^(-2×22)

= 465.233

Present Value of the coupon payment =Price of bond - PV of RV

                          = (106.657% × 2000) - 465.233

                         =    $1667.90

PV of coupon payment= A × (1-(1+r)^(-2×n)

A- semiannual coupon payment, r -yield

   1667.90 = A × (1-(1.0337)^(-2*22))/0.0337

    1,667.90   = A × 22.7710

A = 1,667.90/22.7710

A= 73.246

Annual coupon payment = 2× 73.246=  146.493

Annual coupon rate = coupon payment/ face value

                                = (146.493/2,000 )× 100

                                = 7.32%

Varvara68 [4.7K]3 years ago
6 0

Answer:

Coupon rate is 7.32%

Explanation:

In calculating the coupon rate on the bond,we first of all need to determine the amount of interest payable by the bond on semi-annual basis using the pmt formula in excel:

=pmt(rate,nper,-pv,fv)

rate is the yield to maturity divided by 2 since it is a semi-annual interest paying bond i.e 6.74%/2

nper is the time to maturity of the bond multiplied by 2=22*2=44

the present value is the current price of the bond:$2000*106.657%=$2133.14

The fv is the face value of $2000

=pmt(6.74%/2,44,-2133.14 ,2000)

pmt= 73.25  

annual pmt= 73.25*2= 146.49  

coupon rate=pmt/face value= 146.49/2000

                                              =7.32%

You might be interested in
Explain south africa's reaction to the recommendations given by the who
LenaWriter [7]

Answer:

WHO guidelines

The development of global guidelines ensuring the appropriate use of evidence represents one of the core functions of WHO.

A WHO guideline is defined broadly as any information product developed by WHO that contains recommendations for clinical practice or public health policy. Recommendations are statements designed to help end-users make informed decisions on whether, when and how to undertake specific actions such as clinical interventions, diagnostic tests or public health measures, with the aim of achieving the best possible individual or collective health outcomes.

The Guidelines Review Committee ensure that WHO guidelines are of a high methodological quality and are developed through a transparent, evidence-based decision-making process. Guidelines are subject to a rigorous quality assurance process that helps to ensure that each and every published guideline is trustworthy, impactful and meets the highest international standards.

Explanation:

WHO guidelines

The development of global guidelines ensuring the appropriate use of evidence represents one of the core functions of WHO.

A WHO guideline is defined broadly as any information product developed by WHO that contains recommendations for clinical practice or public health policy. Recommendations are statements designed to help end-users make informed decisions on whether, when and how to undertake specific actions such as clinical interventions, diagnostic tests or public health measures, with the aim of achieving the best possible individual or collective health outcomes.

The Guidelines Review Committee ensure that WHO guidelines are of a high methodological quality and are developed through a transparent, evidence-based decision-making process. Guidelines are subject to a rigorous quality assurance process that helps to ensure that each and every published guideline is trustworthy, impactful and meets the highest international standards.

3 0
2 years ago
Vaseline, the world's most famous—and priciest—brand of petroleum jelly, wants to improve its financial performance (i.e. revenu
ohaa [14]

Answer:

Please consider the following explanation

Explanation:

Vaseline can improve its financial performance by doing some product differentiation, as the rest 15% are also selling petroleum jelly but at much lower costs than Vaseline, and to convince its customers to spend extra bucks to buy Vaseline, it needs to provide something extra.

Vaseline can incorporate extra ingredients like aloevera, or turmeric, etc, i.e. the beauty or health fashions prevalent in the market this information can be obtained by a thorough research of the beauty blogs available online.

Once the product has something extra, Vaseline can go ahead and market its product better based on the benefits of the product differentiation, and hence steam away market from the remaining 15% and increase its financial performance.

6 0
3 years ago
Adelene, who lives in a winter resort area, rented her personal residence for 14 days while she was visiting Brussels. Rent inco
frez [133]

Answer:

a) The effect the rental activity has on Adelene's AGI is $0.                          

b) The total rental income is less than the total expenses for the year, so the reportable rental income is $0.

Explanation:

a)

particulars                                      amount                  amount

rental income                                                                $5,000

property taxes                               $3,800

mortgage interest                          $7,500

utilities                                             $3,700

insurance                                         $2,500

repairs                                              $2,100

depreciation                                     $15,000

total deduction                                                    $34,600

AGI                                                                           $0

Therefore, The effect the rental activity has on Adelene's AGI is $0.                          

b)

particulars                                      amount

Real property taxes                       $3,800

mortgage interest                          $7,500

utilities                                             $3,700

insurance                                         $2,500

repairs                                              $2,100

depreciation                                     $15,000

total expenses                                  $34,600

Therefore, The total rental income is less than the total expenses for the year, so the reportable rental income is $0.

7 0
2 years ago
Cost of Bank Loans Gifts Galore Inc. borrowed $1.6 million from National City Bank. The loan was made at a simple annual interes
babymother [125]

Answer: 23456

Explanation: its math

3 0
3 years ago
12.985+28.105 RESOLVER Y COMPROBAR​
stiv31 [10]

Answer:

410909

Explanation:

6 0
2 years ago
Other questions:
  • Which type of promotion do many people consider more credible because it is less biased?
    9·1 answer
  • Which of the following does not apply to field
    13·2 answers
  • Suppose you had to test how well two types of soap work. describe your experiment by using terms control and variable.
    8·1 answer
  • which of the following is most likely to cause a decrease in equilibrium price and an increase in equilibrium quantity in the ma
    7·1 answer
  • The central bank buys $1,000 of government securities only from commercial banks. The maximum change in excess reserves, banking
    10·1 answer
  • Which of the following employees is most at risk of repetitive strain injury?
    15·2 answers
  • Tình hình kinh tế và triển vọng phát triển của việt nam
    6·1 answer
  • Why does Staples participate in Anti-Money Laundering Compliance?
    9·1 answer
  • Which of the following describes the money you must pay to own an insurance policy?
    9·1 answer
  • You are analyzing the following four companies based on their debt to equity ratio. which company has the highest risk of insolv
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!