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kykrilka [37]
3 years ago
12

LLY Corporation is planning to issue a $1,000 face value bond with a maturity of 30 years. The annual coupon rate is expected to

be 7.25% and interest payments are expected to be paid semi-annually. If the market is requiring a return of 10% annually on similar bonds, then what should LLY expect to receive for each bond they issue? Round to the nearest cent. Do not a dollar sign in your answer. (i.e. If your answer is $432.51, then type 432.51 without $ sign)
Business
1 answer:
VladimirAG [237]3 years ago
6 0

Answer:

$739.72 ≈  739.72

Explanation:

we can use an excel spreadsheet and the present value function to calculate the expected price of each bond ⇒ =PV(rate,nper,pmt,fv,[type])

  • fv = $1,000
  • pmt = $1,000 x 7.25% x 1/2 = $36.25
  • nper = 60
  • rate = 10% / 2 = 5%
  • present value = ?

=PV(5%,60,36.25,1000) = -739.72 since excel calculates the initial investment, it is always negative, so we just change the sign.

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4. You sold a futures contract for GBP10,000 at $1.50/GBP. Suppose that the futures price at settlement was $1.30. How much woul
user100 [1]

Answer: $2,000

Explanation:

The Futures were sold at $1.50/GBP yet the settlement is $1.30/GBP. That means the premium is;

= 1.50 - 1.30

= $0.2/GBP

Payoff would be;

= 10,000 * 0.2

= $2,000

3 0
3 years ago
Don recently received his first credit card, a mastercard with a credit line of $500. in the first month he had it, he ran up ch
andreev551 [17]
He has to pay $175.

500-475 = $25 --> remaining available credit
200-25 = $175 --> what he needs to pay to have enough credit to charge the $200 ticket without going beyond the limit.
4 0
3 years ago
Read 2 more answers
Cash-basis vs. accrual-basis accounting?
ki77a [65]
The cash<span> method accounts for revenue only when the money is received and for expenses only when the money is paid out. On the other hand, the </span>accrual<span> method accounts for revenue when it is earned and expenses goods and services when they are incurred. ... </span>Accrual<span> accounting is the most common method used by businesses.</span>
4 0
4 years ago
You manage employees in several cities, and while you try to visit the various offices as much as possible, your travel schedule
4vir4ik [10]

Answer:

Variable ratio schedule; effective

Explanation:

Reinforcement schedules are designed to introduce or remove reinforcers of punishment after observation of operational behaviour of a given set of people.

There are 3 types: ratio schedule, interval schedule, and extinction schedule.

The most effective type of reinforcement schedule is the variable ratio schedule.

It involves introduction of reinforcers after a particular number of observed responses from the subjects, also for subjects that are exhibiting favourable behaviour reinforcers are removed.

This is more efficient because more focus is given to those people that are lagging behind.

For interval schedule there continues to be a schedule despite variability in behaviour across employees. This is inefficient and stressful.

Variable ratio schedule is exemplified in this instance where visits are variable, and employee performing a desirable behaviour are quick to be praised.

4 0
3 years ago
An investor is analyzing the risk of a possible investment by producing three different scenarios. Under a pessimistic scenario,
pshichka [43]

Answer:

Scenario    R(%)   P      ER       R - ER    (R - ER)2    (R - ER)2.P

Optimistic   16    0.15   24.0    -17.2      295.84       44.376

Most-likely  12    0.60  7.2       -21,2     449.44        269.664

Pessimistic   8    0.25  2.0      -25.2     635.04        158.760

                                ER 33.2                    Variance    472.80

Standard deviation of the return

= √472.80

= 21.74%

Explanation:

The expected return is the product of return and probability. The total expected return is the aggregate of individual expected return. R - ER is the difference between individual return and total expected return. Variance is (R - ER) raised to power 2 multiplied by probability.

8 0
3 years ago
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