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Alenkasestr [34]
3 years ago
11

A 6.75 percent coupon bond with 26 years left to maturity can be called in six years. The call premium is one year of coupon pay

ments. It is offered for sale at $1,135.25. What is the yield to call of the bond? (Assume interest payments are semiannual.)
Business
1 answer:
kiruha [24]3 years ago
8 0

Answer:

The yield to call  is 5.07%

Explanation:

The yield to call can be computed using the rate formula in excel,which is given as :=rate(nper,pmt,-pv,fv)

nper is the number of years to call which is 6 years

pmt is the annual interest coupon payable by the bond,which is :6.75%*$1000=$67.5

The pv is the current price at which the bond is offered to investors. i.e $1,135.25

fv is the price at the bond would be called in six years i.e par value+premium

par value is $1000

premium is $67.5

call price is $1067.5

=rate(6,67.5,-1135.25,1067.5)

rate=5.07%

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Corporation has 11,900 shares of $100 par value, 7%, preferred stock and 45,000 shares of $10 par value common stock outstanding
likoan [24]

Answer:

$249,900

Explanation:

The dividend in arrears on December 31, 2020 is shown below:

= Number of preferred shares × par value × dividend rate × number of years

= 11,900 shares × $100 × 7% × 3 years

= $249,900

The 3 years is taken from December 31, 2017 to December 31, 2020

Moreover, it is not reflected on the liability side but is should be disclosed  on the owners equity notes section

6 0
3 years ago
$1,000 par value zero-coupon bonds (ignore liquidity premiums)
zavuch27 [327]

Answer:

the expected yield to maturity for bond C in 1 year :

1.0799³ = 1.06 x (1 + r)²

1.188 = (1 + r)²

√1.188 = √(1 + r)²

1.08999 = 1 + r

r = 0.08999 = 9%

the yield to maturity of zero-coupon bonds = (future value / present value)¹/ⁿ - 1

0.09 + 1 = ($1,000 / value in 1 year)¹/²

1.09 = ($1,000 / value in 1 year)¹/²

1.09² = $1,000 / value in 1 year

value in 1 year = $1,000 / 1.09² = $1,000 / 1.1881 = $841.68 ≈ $842

5 0
3 years ago
Amaya is a member of a new product design team. The team leader proposed a process that would get quick results, but Amaya was c
Vera_Pavlovna [14]

People often have different suggestions and may or may not agree with each other. Due to groupthink, Amaya did not voice her concern as she did not want to appear unsupportive of the team.

  • Groupthink is known to be a situation that takes place when a group of individuals arrive at a consensus without critical reasoning or looking into the repercussions or alternatives.

It is often based on a common desire not to anger the balance of a group of people.

It can also be regarded as a psychological phenomenon where individual strive to meet a consensus within a group.

Learn more about Groupthink from

brainly.com/question/10206116

5 0
3 years ago
n 2016, Joshua gave $14,000 worth of Microsoft stock to his son. In 2017, the Microsoft shares were worth $23,000. What was the
ElenaW [278]

Answer:

$0

Explanation:

There is a provision that if the tax received on the money with respect to the valuation of the property is more than the $14,000 the same is to be taxable

Since there is $14,000 worth so no tax collection could be made on the gift amount

If the gift amount exceeds $14,000 the same is to be taxable

So the gift tax in 2016 would be $0

8 0
4 years ago
Why is a high-quality bond typically considered a lower-risk investment than a stock?
jasenka [17]
The answer is A.
There is risk involved in owning a stock, and many unknown variables. The value of the stock could plummet, putting your principal investment at risk. There is no guarantee of return on investment, and even well-established companies have had to cut dividends during difficult times.

In the case of bonds, you are guaranteed by the bond issuer that your principal and the agreed-upon interest will be paid at a defined time. Excluding the event of bankruptcy (and still likely in this case), you are virtually guaranteed that the entity will pay you according to the agreed-upon terms. For this reason, bonds are considered a much lower risk investment.

Why then, do many people choose to invest at least part of their portfolio in stocks? Stocks generally have a much high expected return, and many people consider this increased return worth the increased risk that with it. 
7 0
4 years ago
Read 2 more answers
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