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
serious [3.7K]
3 years ago
14

A 20-year maturity, 7.6% coupon bond paying coupons semiannually is callable in seven years at a call price of $1,170. The bond

currently sells at a yield to maturity of 6.6% (3.30% per half-year).
What is the yield to call?

What is the yield to call if the call price is only $1,120?

What is the yield to call if the call price is $1,170 but the bond can be called in four years instead of seven years?
Business
1 answer:
g100num [7]3 years ago
4 0

Answer:

a) YTC 5.895%

b) YTC being call at 1,120 6.6853%

c) we change time and call price 1,170 = 5.33189%

Explanation:

we have to calculate with excel for the PV of the coupon payment and the call price which matches the the

<em><u>First we calculate the price of the bond:</u></em>

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 38.000 1,000 x 7.6% / 2

time 40 (20 years x 2payment per year )

rate 0.033

38 \times \frac{1-(1+0.033)^{-40} }{0.033} = PV\\

PV $837.2785

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   40.00

rate  0.033

\frac{1000}{(1 + 0.033)^{40} } = PV  

PV   272.89

PV c $837.2785

PV m  $272.8897

Total $1,110.1682

Now we solve for the YTC

given a price of 1,110 we receive an annuity of 38 dollars during 7 years and recieve 1,170

we do it in excel:

=PV(A2;14;38)+1,110.17/power(1+A2;28)

the first part is the coupon payment the second maturity

now we solve using goal seek to make this formula worth 1,170 changin a2 which is when we put a rate reference

a) 0.058950255

b)

=PV(A2;14;38)+1,110.17/power(1+A2;28)

we determinate our target as 1,120

0.066853426

c) we change time:

=PV(A2;8;38)+1,110.17/power(1+A2;8)

0.053318904

You might be interested in
A relatively new type of very fast direct connection available to homes and businesses in areas where there is fiber-optic cabli
kotykmax [81]

A relatively new type of very fast direct connection available to homes and businesses in areas where there is fiber-optic cabling available all the way to the building is generically called fibr optic broadband.

Fibr optic broadband, from the name of its material uses fiber-optic cables guarantees faster and more stable and reliable connection compared to the DSL connection. Fibr connection can also cover far distances up to 100 kilometers compare to DSL connection which uses copper wire cable that has the limit of only 100 meters.

<span>Fibr optic broadband also assures more bandwidth and no lags when it comes to large data applications.</span>

4 0
3 years ago
A product found in homes built before 1978 is harmful to children. It can lead to birth defects and is generally hazardous. It s
BabaBlast [244]

Answer:

Asbestos

Explanation:

This environmental hazard is asbestos. Exposure to asbestos especially for a long term period is very detrimental to health. It's fibres can be easily inhaled to the lungs which is dangerous and can cause fibrotic lung disease and also lung cancer. It can lead to defects in birth when inhaled by a pregnant woman and many other health problems. During sales of property it is very important that such hazard is disclosed to the other party.

4 0
3 years ago
The Depression transformed and shattered the expectations of the ""American way of life."" Which are examples of the new reality
Ipatiy [6.2K]

Answer:

Followings are the example of new reality of American life during the Depression or war year is given below in the explanation part

Explanation:

The example is given below:

  • Millions of American people made slum areas over the America in free land and fields because they lost their homes
  • country people tried to find jobs in other countries, they did not find the job there.
  • Faintness inverted people from farms to cities

Depression completely changed the way of Americans live

7 0
3 years ago
You are choosing between these four investments and you want to be​ 95% certain that you do not lose more than 8.00 % on your in
MakcuM [25]

Answer:

option B

Explanation:

In other to know how return fluctuation can be predicted with for instance, x%, predictability, one has to look at the normal distribution curve of return (average returns) to standard deviation of those returns. (check the attached file for additional details).

Hence, to be 95% sure that investment losses are less than 8% one needs to look at 95% of all returns which infact Mean return plos or minus 20. If the lower bound of this interval is less than 8% then the investment needs to be selected

check attached file for additional details

8 0
3 years ago
What is prohibited in a command economy?
aleksandr82 [10.1K]
The answer is b I’m pretty sure
8 0
3 years ago
Other questions:
  • Annie, a marketing manager, is worried her firm is doing a poor job of managing the movement of finished products to the final c
    7·1 answer
  • The higher the _____ that future earnings may not be achieved, the higher the return on investment investors demand.
    15·1 answer
  • A _____________________ is created during the first half of the sprint planning meeting and a _________________ is created durin
    10·1 answer
  • Despite the communication difficulty and barriers with companies from different cultures, many organizations are seeking opportu
    13·1 answer
  • Theodore and James decide to enter into an agreement with a firm in Europe allowing them to use the rights to their​ software, b
    8·1 answer
  • MC Qu. 111 A company has an overhead application... A company has an overhead application rate of 124% of direct labor costs. Ho
    13·1 answer
  • How to eat a burger at bobs grill respectfully
    5·2 answers
  • A _____ is an individual who accepts a fee to falsely claim ownership to a property.
    11·1 answer
  • . jarell is grocery shopping for his bbq cookout this weekend. he is grilling 1313lb. burgers and expects about 20 people. how m
    6·1 answer
  • at global airways, penny piper, manager of flight scheduling, needs to make a decision about flight scheduling. presently global
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!