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Alik [6]
3 years ago
5

A bond with face value $1,000 has a current yield of 6% and a coupon rate of 8%. a. If interest is paid annually, what is the bo

nd’s price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is the bond’s yield to maturity more or less than 8%? More Less
Business
1 answer:
velikii [3]3 years ago
3 0

Answer:

a. Price of Bond is $1,333.33

b. Less

Explanation:

a.

Current yield is the ratio of coupon payment to the market value of the bond. It is the rate of income received from bond at current market rate.

As given

Coupon Payment = $1,000 x 8% = $80

Current Yield formula is as follow

Current Yield = Coupon Payment / Market Value

6% = $80 / Market Value

Market Value = $80 / 6%

Market Value = $1,333.33

b.

As we know that

if Price > Face value then YTM < Coupon rate

if Price < Face value then YTM > Coupon rate

if Price = Face value then YTM = Coupon rate

According to given condition

$1,333.33 > $1,000 then YTM < 8%

The bond’s yield to maturity is less than 8%.

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Firms engage in __________ when their intimate knowledge and expertise in one market allows them to offer customized marketing p
blagie [28]

Answer:

The correct answer is letter "C": market specialization.

Explanation:

After <em>segmenting </em>their market, companies tend to start their phase of market specialization with the information gathered in their research which is helpful to spot what the company's best segment of the market is based on <em>age, gender, </em>and <em>consumer income</em>. With that information, firms can drive their efforts toward producing a good or rendering a service that satisfies the needs of a specific group of them.

3 0
3 years ago
According to the specifications that a customer gave to a manufacturer, the length of a shoe should not deviate from the correct
vichka [17]

Answer:

Capability ratio = 1.04166

Explanation:

Given:

Length of a shoe (not deviate) = 1 mm

Standard deviation of this length = 0.32 mm

Number of standard deviations = 3

Find:

Capability ratio = ?

Computation:

Capability ratio = [Length of a shoe (not deviate) / Standard deviation of this length] / Number of standard deviations

Capability ratio = [1 / 0.32] / 3

Capability ratio = 3.125 / 3

Capability ratio = 1.04166

Capability ratio is greater than 1, therefore process is capable.

4 0
3 years ago
The Fish House is expected to pay annual dividends of $1.23 and $1.25 at the end of the next two years, respectively. After that
lorasvet [3.4K]

Answer:

c. $8.05

Explanation:

Calculation to determine What is the value of this stock at a required return of 16.4 percent

First step is to calculate the P2

P2 = ($1.35/.164)

P2= $8.23

Now let calculate the value of the stock

P0 = [$1.23 /1.164] + [($1.25 + 8.23)/1.164^2]

P0 = $8.05

Therefore the value of this stock at a required return of 16.4 percent is $8.05

4 0
2 years ago
The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of a T-shirt reflects its marginal cost to M
DaniilM [7]

Answer:

The correct answer is option d.

Explanation:

The marginal benefit of another T-shirt is $15. The price of the T-shirt is $10.  

The marginal cost is equal to the price, so it is also $10.  

The marginal benefit earned from the T-shirt is greater than the marginal cost incurred on a T-shirt.  

According to economic reasoning, it is profitable to buy another T-shirt. So, Mary will buy another T-shirt this month.

5 0
3 years ago
Mauve Company permits employees to occasionally use the copying machine for personal purposes. The copying machine is located in
wlad13 [49]

This is a <u>false</u> statement.    

<u>Explanation</u>:

The employees of Mauve Company are permitted to use the copying machine in the office for personal purpose occasionally. The copying machine is placed in the room where the higher officials work. So the use of the machine was limited. It is difficult for the low wage employees and employee working in warehouse to use the copying machine as the machine is placed in high official’s room. So the low wage employees never use the copying machine. The use of the copying machine may not be excluded from gross income as the benefit is unfair.

3 0
3 years ago
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