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Misha Larkins [42]
3 years ago
11

A perpetuity pays $170 per year and interest rates are 8.2 percent. How much would its value change if interest rates increased

to 9.7 percent
Business
1 answer:
weqwewe [10]3 years ago
8 0

Answer:

$320.59 decrease

Explanation:

The computation of the change in the value is shown below:

As we know that

The Value of perpetuity is

= Annual inflows ÷ interest rate

Current value is

= $170 ÷ 0.082

= $2,073.17

And,

New value is

= $170  ÷ 0.097

= $1,752.58

Now change in value is

= $2,073.17 - $1,752.58

= $320.59 decrease

We simply applied the above formula

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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua
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Answer:

Bond price=$888.35

Explanation:

<em>The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate</em>

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The value of bond for Local School District can be worked out as follows:

Step 1

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Step 2

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Step 3

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6 0
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When an investment bank ________ securities, it guarantees a price for a corporation's securities and then sells them to the pub
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Explanation:

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