When a monopolist can perfectly price discriminate, it follows that

Both Bond Sam and Bond Dave have 7.3 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has three

Zarrin [17]

Answer:

Sam change: -5.13%

Dave change -18.01%

Explanation:

If interest rate increase by 2%

then the YTM of the bond will be 9.3%

We need eto calcualte the present value of the coupon and maturity of the bond at this new rate:

For the coupon payment we use the formula for ordinary annuity

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

Coupon payment: 1,000 x 7.3% / 2 payment per year: 36.50

time 6 (3 years x 2 payment per year)

YTM seiannual: 0.0465 (9.3% annual /2 = 4.65% semiannual)

$36.5 \times \frac{1-(1+0.0465)^{-6} }{0.0465} = PV\\$

PV $187.3546

For the maturity we calculate usign the lump sum formula:

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

Maturity: $ 1,000.00

time: 6 payment

rate: 0.0465

$\frac{1000}{(1 + 0.0465)^{6} } = PV$

PV 761.32

Now, we add both together:

PV coupon $187.3546 + PV maturity $761.3154 = $948.6700

now we calcualte the change in percentage:

948.67/1,000 - 1 = -0.051330026 = -5.13

For Dave we do the same:

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

C 36.50

time 40

rate 0.0465

$36.5 \times \frac{1-(1+0.0465)^{-40} }{0.0465} = PV\\$

PV $657.5166

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

Maturity 1,000.00

time 40.00

rate 0.0465

$\frac{1000}{(1 + 0.0465)^{40} } = PV$

PV 162.34

PV c $657.5166

PV m $162.3419

Total $819.8585

Change:

819.86 / 1,000 - 1 = -0.180141521 = -18.01%

6 0

3 years ago

A frequent customer approaches you and says that lately, service has not been as good as it usually is at the restaurant where y

Helga [31]

You will say to the customer kindly I'm sorry for disappointing you I will do everything that is possible for service to be satisfy to you and tell me why do you say service isn't as good maybe I can make things better

6 0

3 years ago

How is a job search conducted

serg [7]

You provide what you like like and santa brings it to north pole and see what is best for you

3 0

2 years ago

carmax has developed an organization focused on delivering value to its customers. what were the drawbacks of the way carmax was

Vika [28.1K]

The drawbacks of the method adopted by CarMax were related to target markets and their Core values, market competencies, idea of Test drives before purchase of product, emergence of competitive companies with their Competitive products and development of a sustainable competitive edge.

CarMax is a vehicle retailer organization situated in US. It provides less expensive cars to customers mainly due to the large inventory that it owns. It provides the option of test driving of car before actually selling it. One of the major weaknesses of the CarMax was it outdated inventory management system. Some customers were even not satisfied with their car selling policies. The disruption in emerging technologies and Changing consumer behavior with huge variety of vehicles also posed certain challenges to the delivery services of CarMax.

Learn more about CarMax at:

brainly.com/question/16782872

#SPJ4

5 0

1 year ago

Laura is forecasting the time and cost of developing an intranet for a new customer. Her department has completed six such intra

madam [21]

Answer:

Learning curve

Explanation:

Reference is made to the time and cost with respect to the fact that the proposed system is about the same size as others. Learning curve theory teaches to identify cost and time in relation to specific jobs

3 0

3 years ago