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
Diano4ka-milaya [45]
3 years ago
15

Suppose you purchase a​ 10-year bond with 6.5 % annual coupons. You hold the bond for four​ years, and sell it immediately after

receiving the fourth coupon. If the​ bond's yield to maturity was 5.3 % when you purchased and sold the​ bond, a. What cash flows will you pay and receive from your investment in the bond per $ 100 face​ value? b. What is the annual rate of return of your​ investment?
Business
1 answer:
Andrews [41]3 years ago
4 0

Answer:

  • a. What cash flows will you pay and receive from your investment in the bond per $ 100 face​ value?

Year 0   Year 1   Year 2   Year 3   Year 4  

-$109,13   $6,50   $6,50   $6,50   $112,53 (6,5+106,03)  

  • b. What is the annual rate of return of your​ investment?

5,3%, the YTM of the bond.

Explanation:

If the YTM of the bond does not change during the year, it means that at the time the bond was sold, the total rate of return would be the same as was when the bonds were purchased, in this case 5,3%.  

  • Bond Value

Principal Present Value  =  F /  (1 + r)^t  

Coupon Present Value   =  C x [1 - 1/(1 +r)^t] / r  

Price of the Bond at the moment it was purchased:  

The price of this bond it's $59,66 + $6,5 = $109,13  

Present Value of Bonds $59,66 = $100/(1+0,053)^10    

Present Value of Coupons $49,47 =  $6,5 (Coupon) x 7,61  

7,61 =   [1 - 1/(1+0,053)^10 ]/ 0,053  

Price of the Bond 4 years later:    

The price of this bond it's $73,66 + $32,68 = $106,03    

Present Value of Bonds $73,66 = $100/(1+0,053)^6      

Present Value of Coupons $32,68 =  $6,50 (Coupon) x 5,03    

5,03 =   [1 - 1/(1+0,053)^6 ]/ 0,053    

You might be interested in
International monetary analysis focuses on Group of answer choices the international trade side of the international economy. th
Ganezh [65]

Answer:

the monetary side of the international economy, such as currency exchange.

Explanation:

Globalization can be defined as the strategic process which involves the integration of various markets across the world to form a large global marketplace. Basically, globalization makes it possible for various organizations to produce goods and services that is used by consumers across the world.

An exchange rate can be defined as a number used to represent the value of one country's currency in comparison to another.

International monetary analysis focuses on the monetary side of the international economy, such as currency exchange.

6 0
3 years ago
Two individuals start the same training program at the same time, but one is able to grow muscle faster and larger than the othe
stellarik [79]

Answer:A.One individual was born with more muscle fibers.

Explanation:

Muscle fibers are fibers that helps us break down the protein in our body and protein are the actual muscle makers .

If someone is born with muscle fibers his body breaks up these protein faster that the normal individual which makes their muscles build up faster than a normal person .

6 0
3 years ago
Read 2 more answers
When preparing the retained earnings statement, the beginning retained earnings balance can always be found a. in the general le
marta [7]

Answer:

a. in the general ledger

Explanation:

When preparing the retained earnings statement, the beginning retained earnings balance can always be found in the general ledger.

5 0
3 years ago
Conclusion about anti dumping
Mariulka [41]
First, what is anti dumping? (Like anti dumping garbage? Anti dumping you girl/boyfriend?)
Second, what is your thesis?
With the above info, I can write a conclusion :)
4 0
3 years ago
In the glare of the sun, it is hard to see and be seen. Name six precautions you can take to help other vehicles and pedestrians
ICE Princess25 [194]
1. Keep your windshields clean.
Drivers are advised to make sure both their interior and exterior of their windshields are kept clean to minimize the glare. The particles on a dirty windshield intensify the glare as opposed to blocking it.2. Be mindful.
Both pedestrians and motorist are advised to be mindful of sun glare because it comes out suddenly .Focus farther down the road and be aware when turning into sun.
3.Drive defensively.
When driving also understand that other drivers may slow down significantly or even stop suddenly. Leave a large gap between you and the in front to keep everyone safe.
4. Keep a set of porpoised glasses nearby.
The glasses will protect your eyes from sun glare. They should be kept in a place where easily reached in case of sudden sun glare.
5.Put on additional visors.
For safety purposes you can purchase additional visors for your car or just be sure to test the ones currently in use to improve visibility in sun glare
6.Use Headlights.
Even during bright days having headlights can help you be more visible to other drivers and pedestrians.
7 0
3 years ago
Other questions:
  • Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting D
    11·1 answer
  • Tree Seedlings has the following current-year purchases and sales for its only product. The company uses a periodic inventory sy
    11·1 answer
  • Annie is excited about a $500 income tax return and is already contemplating which shoes to purchase. annie is exhibiting
    9·1 answer
  • Which of the following steps, if taken by Walmart, would be characterized as a strategic, rather than tactical, action? a. Aggre
    13·1 answer
  • If a check written and paid by the bank for $638 is incorrectly recorded on the company’s books at $683, the appropriate treatme
    12·1 answer
  • Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per
    15·1 answer
  • Brand loyalty, usage rate, and perceived risk are studied with which possible base of market segmentation?
    15·1 answer
  • Store A offers an item you want for $750 with a yearly maintenance plan that will cost you $50 each year over the next five year
    6·1 answer
  • Which of the following falls outside of the classification of business expenditures that fall into the category of variable cost
    9·1 answer
  • A local chamber of commerce plans a seminar on ""the social responsibility of business in our community. "" what does the term r
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!