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
Yanka [14]
2 years ago
12

)In six months, your company plans to issue a 1.5 year zero coupon bond with a face value of $500,000 to finance a small acquisi

tion. If the traditional expectations theory of the term structure is correct, and if the risk of your company's bonds is similar to that of the above bonds, what is the expected price of your company's bond at issue (i.s., in six months hence)

Business
1 answer:
pishuonlain [190]2 years ago
8 0

Answer:

$441,495

Explanation:

Since the information is incomplete, I looked for the missing part and found the attached information.

the current yield of a 1.5 years zero coupon bond = (100 / 89.9)¹/¹°⁵ - 1 = 0.0736 = 7.36%

the current yield of a 6 months zero coupon bond = (100 / 97.087)¹/⁰°⁵ - 1 = 0.0609 = 6.09%

now to calculate the future interest rate:

(1.0736²/1.0609) - 1 = 0.0865 = 8.65%

since we are told to determine the price of the bond:

(100/P)¹/¹°⁵ - 1 = 0.0865

(100/P)¹/¹°⁵ = 1.0865

100/P = 1.0865¹°⁵

100/P = 1.1325

100/1.1325 = P

P = 88.299

the expected price of the bond = 88.299% x $500,000 = $441,495

You might be interested in
The following information is for Chambersburg Corp. for 2018 and 2017. Chambersburg uses the straight-line depreciation method.
photoshop1234 [79]
Gghjuuujh handkerchiefs 2.5
6 0
2 years ago
Thirty-five members of the Ortiz extended family were spread across three states—Illinois, New York and Florida—and they rarely
Stells [14]
The answer will be 2,500 because u have to calculate which I did.
8 0
2 years ago
What is markerting management
Mnenie [13.5K]
The application, tracking and review of a company's marketing<span> resources and activities. ... Effective </span>marketing management<span> will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value.</span>
4 0
2 years ago
All of the following statements about the economic philosophy in Texas are true EXCEPT
ZanzabumX [31]

Answer:

The answer is: B) The median wage in Texas is much higher than the national average. THIS STATEMENT IS FALSE.

Explanation:

If you take the facts from the Census ACS 1 year survey, the median household income in Texas is $59,206 (2017 data) and a median hourly wage of $17,06 (2016 data from the Bureau of Labor Statistics).

If you compare those numbers with the national average, the US median household income is $60,336 (the national average is $1,130 higher than the Texas median household income). Historically the Texas median household income has been lower than the national average.

If we consider the median hourly wage in Texas of $17,06 (2016 data) and we compare to the national hourly wage of $17,81 (2016 data from the Bureau of Labor Statistics) we can clearly see it´s also lower. The top ten states with the highest median hourly wage are: Alaska, Massachusetts, Connecticut, Washington, Maryland, New York, New Jersey, California, Minnesota, Hawaii, with hourly wages ranging from $22.68 to $19.24

7 0
2 years ago
If a management team wishes to undertake efforts specifically aimed at helping the company meet or beat the investor-expected in
dusya [7]

Boom general operating profits in all four geographic areas -- the resulting growth in working earnings will improve general net income and assist increase the EPS, using the business enterprise's stock fee upward.

Due to the fact, that the boom in EPS can bring about an elevated and strong dividend, and thus can have an impact on the investors to buy the stocks, resulting in a boom in stock prices.

The inventory price is a relative and proportional price of an organization's worth. consequently, it only represents a percent alternate in an organization's market cap at any given factor in time. Any percentage adjustments in an inventory fee will bring about the same percent trade in a company's marketplace cap.

A percentage fee is the rate of an unmarried proportion of a number of saleable equity shares of an organization. In layman's terms, the stock price is the best amount someone is willing to pay for the inventory, or the bottom amount that it can be bought for.

Learn more about company's stock price here: brainly.com/question/25818989

#SPJ4

5 0
1 year ago
Other questions:
  • One of the costs listed below is an opportunity cost. identify this cost.
    11·1 answer
  • For a Global Strategy, Group of answer choices products tend to be customized to the local market. strategic decisions are decen
    6·1 answer
  • Write a report on a trend in business that you’ve observed, and highlight at least the main finding. For example, from the risin
    9·1 answer
  • In its first month of operations, Giffin Company made three purchases of merchandise in the following sequence: (1) 300 units at
    13·1 answer
  • Cactus Company purchased a new machine on August 1, 2017. At that time, the original cost of the machine was recorded at $180,00
    6·1 answer
  • Issuing Bonds at a Discount On the first day of the fiscal year, a company issues a $4,000,000, 6%, 8-year bond that pays semian
    14·1 answer
  • Beauty salon opportunities and threats
    10·1 answer
  • On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on
    8·1 answer
  • Explain what would happen if there was safety issue of renting the apartments
    8·1 answer
  • A bond has a par value of $1,000, a market price of $300, and a 9% coupon rate. It will mature in 5 years. What is the current y
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!