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ZanzabumX [31]
3 years ago
14

New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 11 percent that can be called in one year.

The bond makes annual coupon payments and has a par value of $1,000. The call premium is set at $125 over par value. There is a 60 percent chance that the interest rate in one year will be 13 percent, and a 40 percent chance that the interest rate will be 9 percent. If the current interest rate is 11 percent, what is the current market price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Virty [35]3 years ago
8 0

Answer:

961.88

Explanation:

First, examine whether the bond will be called if interest rate falls to 9%. The call price is

1,000 + 125 = 1,222. Bond price at 9% yield will be

$110/0.13 > call price of 846.15

Bond will be called. The price of the callable bond therefore is:

=+[.60(846.15)+.40(1125)]/1.11+110/1.11 =961.88

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Industries sales budget shows quarterly sales for the next year as​ follows: Quarter 1dash17 comma 000​; Quarter 2dash15 comma 0
Angelina_Jolie [31]

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Quarter 1: 17,000​;

Quarter 2: 15,000​;

Quarter 3: 19,000​;

Quarter 4: 21,000.

Company policy is to have a target​ finished-goods inventory at the end of each quarter equal to 25 % of the next​ quarter's sales.

2nd Q production:

Sales= 15,000

Ending inventory= 0.25*19,000= 4,750

Beginning inventory= (15,000*0.25)= (3,750)

Total= 16,000 units

8 0
3 years ago
You are considering purchasing a put option on a stock with a current price of $26. The exercise price is $28, and the price of
Goshia [24]

Answer: $4.24

Explanation:

According to the Put-Call Parity, the value would be expressed by;

Put Price = Call price - Stock price + Exercise price *e^-(risk free rate *T)

T is 90 days out of 365 so = 90/365

= 2.65 - 26 + 28 * 2.71 ^ (-0.06 * 90/365)

= $4.24

4 0
3 years ago
Read 2 more answers
Clara and Nathan have planned to merge their companies. They have met to put forth their respective proposals and the rationale
nikitadnepr [17]

Answer:

The correct answer is the option C: Clarification and justification.

Explanation:

To begin with, in the stage of <em>clarification and justification</em> of the negotiation process the parties do not need to be argumentative but instead they need to be educative to each other by showing the other what are the reasonable statements that are established in order to proove their positions on each argument done before. That is why, in this stage the positions of each party are discussed at length in order to comprehend what every party is supporting for and that is why this stage is called of ''justification''.

5 0
3 years ago
The Real Estate Settlements and Procedures Act (RESPA) applies to: Select one: A. those parties who are indirectly related to a
ad-work [718]

Answer:

D. all residential mortgages for occupancy only.

Explanation:

  • The act applies to the loan purchases, property investments and equity lines of credit. It proves brokers to give disclosure of borrowers regarding the real estate.
8 0
3 years ago
Max was the brand manager for a pet food company that was to introduce a new brand of dog food. Through research, they had disco
vredina [299]

Answer:

C. It is not a good brand name because it is too long.

Explanation:

I would say that It is not a good brand name because it is too long. The reason is that brand name needs to be concise and to the point. It should be catchy and some cases should suggest what the brand is about.

It can be the product name but even for that it is too long. This brand name fits perfectly as a tag line for this new dog food line.

I hope the answer is helpful. Thanks for asking.

5 0
3 years ago
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