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kondor19780726 [428]
3 years ago
11

A portfolio manager is considering the purchase of a bond with a 5.5% coupon rate that pays interest annually and matures in thr

ee years. If the required rate of return on the bond is 5%, the price of the bond per 100 of par value is closest to:
Business
1 answer:
dmitriy555 [2]3 years ago
7 0

Answer:

The price of the bond is closest  $101.36  

Explanation:

It is noteworthy that a rational investor pays for a bond today the cash flows derivable from the bonds in future discounted to today's terms.

The future cash flows comprise of the yearly coupon interest of $5.5(5.5% *$100) for 3 years as well as the repayment of the principal $100 at the end of year 3.

To bring the cash inflows today's term, we multiply them  them by the discounting factor 1/(1+r)^N , where is the yield to maturity of 5% and N is the relevant the cash flow is received.

The discounting is done in attached spreadsheet leading $ 101.36  present value today.

Download xlsx
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The answer is $6200.00

Based on https://taxfoundation.org/2014-tax-brackets/

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2 years ago
Piedmont Hotels is an all-equity company. Its stock has a beta of .82. The market risk premium is 6.9 percent and the risk-free
katrin2010 [14]

Answer:

11.86%

Explanation:

Piedmont hotels can be described as an all-equity company

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The adjustment is 1.7%

Therefore, the required rate of return can be calculated as follows

Required rate of return= Risk free rate of return + ( beta×market risk premium) + adjustment

= 4.5% + (0.82×6.9%) + 1.7%

= 4.5% + 5.658 + 1.7%

= 11.86%

Hence the required rate of return for the project is 11.86%

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3 years ago
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sukhopar [10]

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Explanation:

I hope that help you

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The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2016 and 2017.
Step2247 [10]

Answer:

Explanation: Ik weet het echt niet en ik ga je plagen met mijn antwoord, ik verwacht niet dat je je moeder afbreekt op zoek naar dit haha.  

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3 years ago
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