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S_A_V [24]
3 years ago
12

One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent, paid semiannually, and a fa

ce value of $1,000. Today, the market yield on these bonds is 7.2 percent. What is the percentage change in the bond price over the past year?
Business
1 answer:
ycow [4]3 years ago
5 0

Answer:

Percentage change in the bond price=0.524%

Explanation:

The current bond price can be expressed as;

Current bond price=(Semi-annual coupon×((1-(1/(1+r)^i)/r)+ (face value/(1+r)^i)

where;

i-maturity period=1 year ,since it has 2 periods in a year,i=2

r-nominal yield to maturity rate=7.2/2=3.6%

Semi-annual coupon rate=6.5/2=3.25%

face value=$1,000

Semi- annual coupon=(3.25/100)×1,000=$32.5

replacing;

Current bond price=Semi-annual coupon×((1-(1/(1+r)^i)/r  + face value/(1+r)^i

(32.5×((1-(1/(1+0.036)^2)/0.036)+1,000/(1+0.036)^2

(32.5×(1-0.93)/0.036)+931.71

(32.5×1.94)+931.71=63.05+931.71=

Current bond price=$994.76

Percentage change=((Face value-Current bond price)/(Face value))×100

Percentage change=((1,000-994.76)/1000)×100

(5.24/1000)×100=0.524%

Percentage change in the bond price=0.524%

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<u>Conflict in the workplace is inevitable and is a painful reality and is the major reason   for poor productivity and frustration among the employees.If conflict is managed in a proper way it can lead to increase in employees productivity.The strategist that can be used are:-</u>

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Understanding/listening  both the side of the story before resolving the conflict is very important

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setting guidelines before the meeting

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As assistant to the CFO of Boulder Inc., you must estimate the Year 1 cash flow for a project with the following data. What is t
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A local family-run Greek restaurant has been a part of the community for twenty years. Their mission is to provide local, fresh,
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Creative Canopies (CC) is a manufacturer of flexible canopies for athletic facilities. CC has contracts with 3 universities to i
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Answer:

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a) Maintenance Costs of Canopies:

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Major refinishes:    Hours on jobs                 $55

Minor touchups:     Number of visits          $400

Communication:     Number of calls             $25

b) Customer Data:

University    Hours      major Visits    minor Calls=

USD             100               7                     12

USC              90               5                     15

UCLA           120              6                      9

c) Calculation of the Cost of Canopy Maintenance for each customer:

University  Hours  Major   Minor  Major          Minor     Commun-  Total

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USD           100         7         12       $5,500        $2,800      $300    $8,600  

USC            90         5         15       $4,950        $2,000      $375    $7,325

UCLA         120        6          9      $6,600        $2,400      $225    $9,225

d) Calculation of net income from each customer:

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USC               $10,000                 $7,325                         $2,675

UCLA            $10,000                 $9,225                            $775

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