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
alexira [117]
3 years ago
12

A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be

the rate of return on the bond if its yield to maturity at the end of the year is: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Rate of Return a. | 6% b. | 8% c. | 10%
Business
1 answer:
il63 [147K]3 years ago
4 0

Solution:

Annual coupon payment of the bond is $80

At the beginning of the year, remaining maturity period is 2 years.

Price of the bond is equal to face value, i.e. the initial price of the bond is $1000.

New price of the bond = present value of the final coupon payment + present value of the maturity amount.

New price of the bond = $\frac{80}{1+r} +\frac{1000}{1+r}$

where, r is the yield to maturity at the end of the year.

Substitute 0.06 for r in the above equation,

Therefore new price of the bond is  = $\frac{80}{1+0.06} +\frac{1000}{1+0.06}$

                                                           = $\frac{1080}{1.06}$

                                                           = $ 1010.87

Calculating the rate of return of the bond as

$\text{rate of return}=\frac{\text{coupon+new price-old price}}{\text{initial price}}$

                     $=\frac{80+1018.87-1000}{1000}$

                     = 0.09887

Therefore, the rate of return on the bond is 9.887%

                                                                    ≈ 10 %

You might be interested in
Which type of inflation occurs when prices are high, then drop due to lower demand, and then are restored to a previous high lev
natta225 [31]

Answer:

Reflation

Explanation:

8 0
3 years ago
________ are hired as needed and are not part of the organization's permanent workforce. select one:
Brrunno [24]
C. Independent contractors
5 0
3 years ago
Patrick has an adjusted gross income of $120,000 in the current year. He donated $50,000 in cash to a public charity; capital ga
bogdanovich [222]

Answer:

$8,000 bc (AGIx30%)- contributions

if this is a multiple choice question post the choices and i will tell you the corrrect one. thanks

4 0
3 years ago
The price elasticity of demand if the price of a pint falls from $8 to $6 is
melamori03 [73]
It means to say that the demand of the product is decreasing.  The relationship between the price and demand is one way. It means to say that if the price increases, the demand is higher. In this scenario, the price increases to avoid shortage on the product. If the price is decreasing, it means to say that the demand is decreasing and can possibly cause surplus on the said product. Lowering the price allows consumers to have higher purchasing power and enticing them to purchase such product.
6 0
3 years ago
It is estimated the national cost of overweight and obesity combined each year is:________
Evgen [1.6K]

It is estimated the national cost of overweight and obesity combined each year is <u>113 billion dollars</u>

<u></u>

<h3>What are Obesity and overweight?</h3>

According to the definition of obesity and overweight in the United States, these conditions are characterized by an increase in the size and number of fat cells in the body. Many things contribute to becoming overweight or obese, including habits including eating habits, lack of sleep or exercise, some medications, genetics, and family history.

Obesity is a long-term medical condition that increases the risk of heart disease, the number one killer in the US, and is associated with a wide range of other health issues, for example type 2 diabetes and cancer.

In the US, about a third of adults (20 and older) are either overweight or obese. Between the ages of 2 and 19, over 1 in 5 kids and teens are obese.

Learn more about obesity

brainly.com/question/1646944

#SPJ4

5 0
1 year ago
Other questions:
  • Is phoenix forgotten based on a true story and how does it end?
    5·1 answer
  • As time goes on and stresses increase, marital satisfaction goes down. For many couples, the reason for this drop is having chil
    11·1 answer
  • Griffin's Goat Farm, Inc., has sales of $604,000, costs of $255,000, depreciation expense of $53,000, interest expense of $35,00
    9·1 answer
  • The Pie ________ command can be used to move individual slices of a pie away from the center, emphasizing individual value.
    7·1 answer
  • Vanessa Company is evaluating two projects. project 1 is a project requiring a capital expenditure of 814,400. the project has a
    10·1 answer
  • A multi-location flower shop receives payment from customers in person, over the Internet, and through the mail. When checks com
    15·1 answer
  • How is everyone's day so far?
    15·2 answers
  • Which of the concepts below is a characteristic of a Veblen good?
    10·1 answer
  • 2. Happy Selling Company's salaries to sales agents amounted to Php 10,000. Salaries of accountants
    13·2 answers
  • ________ models assist top-level managers in long-range planning, such as stating company objectives or planning plant locations
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!