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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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Not trying to be rude but that’s too much for too little amount of points
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4 0
2 years ago
A performance obligation​ is: A. An enforceable promise in a contract with a customer to transfer a good or service to the custo
Bumek [7]

Answer:

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Explanation:

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4 0
3 years ago
Read 2 more answers
he idea of increasing opportunity cost is reflected in the A. bowed in shape of the production possibilities frontier. B. positi
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Answer:

E) bowed out shape of the production possibilities frontier.

Explanation:

The production possibilities frontier curve is usually has a bowed out shape because as the production of one of the products increases, the opportunity cost of producing the other product also increases.

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Ron, a businessman who invests heavily in the stock market, has suffered a serious loss with his latest venture. The very though
IRINA_888 [86]

Answer: Escape avoidance

Explanation:

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Escape avoidance involves trying to avoid stress than dealing with them.

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_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of prod
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