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
S_A_V [24]
3 years ago
13

Your company currently has par, coupon bonds with 10 years to maturity and a price of . If you want to issue new 10-year coupon

bonds at par, what coupon rate do you need to set
Business
1 answer:
vovangra [49]3 years ago
3 0

Answer:

I looked for the missing numbers and found the following question:

Your company currently has $1,000 ​par, 6.5% coupon bonds with 10 years to maturity and a price of $1,078. If you want to issue new​ 10-year coupon bonds at​ par, what coupon rate do you need to​set? Assume that for both​ bonds, the next coupon payment is due in exactly six months.

We need to calculate the yield to maturity (YTM) of the current bonds. Since the bonds pay interests every 6 months, then the coupon = $32.50

YTM = {coupon + [(face value - market value)/n]}/[(face value + market value)/2]

YTM = {32.5 + [(1,000 - 1,078)/20]}/[(1,000 + 1,078)/2]

YTM = 28.6 / 1,039 = 0.275 x 2 = 5.5053% ≈ 5.51%

In order to sell the new bonds at par, the coupon rate must be 5.51%

You might be interested in
In what circumstances is it most important to use multistage dividend discount models rather than constant-growth models?
patriot [66]

Answer:

when valuing companies with temporarily high growth rates.

Explanation:

Discounted dividend models are methods to assess a company's share price based on the dividends that company will distribute in the future. Also known by its name in English dividend discount model (DDM).

These models are based on the theory that the price of a share must be equal to the price of the dividends that the company will deliver, discounted at its net present value.

If the price of the share in the market is lower than the result obtained by the discounted dividend model, the share is undervalued and therefore it is advisable to buy. If, on the contrary, the market price is higher than the model, it is understood that the share price is too high.

Multistage dividend growth models

It is very difficult for a company to experience the same growth every year as the Gordon model assumes, so multistage models assume different growths for each period.

The most common is to use two or three stage growths, where at first the growths are higher but then tend to stabilize at a smaller constant growth. As for example in early stage companies.

5 0
3 years ago
What is the minimum number of days for an informal complaint to be resolved? (equal opportunity complaint process, page 2)?
krek1111 [17]
I believe there are no minimum number of days for this.
informal process of the complaints typically follow the method that is usually not aimed to be finished in legal court.
the purpose of informal complaint usually only to resolve a simple difference rather than full investigation.
7 0
3 years ago
Stephanie receives high praise from her boss when she attracts a new client to her firm. this praise leads stephanie to work har
masya89 [10]
<span>D) Stephanie's Boss is exhibiting D) Positive Reinforcement as it her actions are being rewarded with praise, which in turn causes Stephanie to work harder to continue to grow the firm and receive more praise.</span>
4 0
3 years ago
Read 2 more answers
Surrealists emphasized _____________ instead of ____________.
liberstina [14]

The correct answer is irrationalism and rationalism. It is because surrealist are cultural movement in which they are likely to reunite cultures or different races in means of having to have unity, that’s why they are likely to focus more on irrationalism than rationalism.

3 0
3 years ago
Read 2 more answers
The information below pertains to Basselier, Inc.:
wel

Answer and Explanation:

The journal entry to record the tax provision is given below:

Income tax expenses $48,840,000

Deferred tax assets ($10,900,000 ×0.40) $4,360,000

        To Deferred tax liability (($15,900,000 + $1,900,000)×0.40) $7,120,000

          To Income tax payable ($129,000,000 ×0.40) $51,600,000

(To record income tax expenses)  

Here the income tax expense and deferred tax asset should be debited as it increased the asset and expenses and credited the liability & tax payable as it increased the liability  

4 0
3 years ago
Other questions:
  • In your own opinion, why do you think it is important to establish a daily job search routine?
    12·2 answers
  • If consumers start to believe they need a product, what is likely to happen? A. The demand becomes less elastic. B. The demand b
    7·1 answer
  • Northwest Fur Co. started 2021 with $103,000 of merchandise inventory on hand. During 2021, $560,000 in merchandise was purchase
    14·1 answer
  • chase lives in oregon but works for a company that is located in florida. what business trend is this an example of ?
    15·1 answer
  • For young adult students in higher education, Vinson advocates that leaders carefully utilize to help group members better under
    15·2 answers
  • Soft drink sales are declining as more consumers are concerned about their health. This represents a change in the __________. A
    5·1 answer
  • What best determines whether a borrower's investment on an adjustable rate loan goes up or down?
    7·1 answer
  • Jan and Kyle sign a contract that provides if a dispute arises, they will submit to arbitration. A dispute arises, but before it
    8·1 answer
  • Which economist theorized that depression will occur when the economic cycle is broken?
    7·1 answer
  • Association Rule Analysis is the statistical technique typically used to conduct market basket analysis.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!