Ask question

Ask question

All categories

3 years ago

11

Terrapins has a bond issue outstanding with nine years remaining to maturity, a coupon rate of 10% with interest paid semi-annua

lly, and a par value of $1,000. If the current market price of the bond issue is $814.45, what is the yield to maturity?

1 answer:

malfutka [58]3 years ago

3 0

Answer:

the answer is $345.98.

Explanation:

hope it helps you

You might be interested in

According to the Fisher effect, if the "real" rate of interest in a country is 3 percent and the expected annual inflation is 8

Pachacha [2.7K]

Answer:

11.24%

Explanation:

Fisher equation:

(1 + nominal interest rate) = (1 + real interest rate) x (1 + expected annual inflation)

1 + nominal interest rate = 1.03 x 1.08

--> Nominal interest rate = 11.24%

3 0

3 years ago

Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will ad

Paul [167]

Answer:

the answer for the first question is $166667.

the answer for the second question is $210526

the answer for the third question is An inverse.

Explanation:

given information that i will invest in a $10000 scholarship that will pay forever.

the interest rate charged is 6.00% per annum therefore this is a perpetuity present value problem where there is streams of income forever therefore we use the formula :

Pv of perpetuity= Cf/r

where Cr is the cash flows payed by the single investment forever in this case $10000 then r is the interest rate of the investment amount which is 6% in this case.

Pv of Perpetuity= $10000/6%

=$166667 therefore i must invest this amount to get the scholarship running with streams of $10000 forever.

in the second problem if now the interest rate is changed from 6% to 4.75% then the amount to be invested would be :

Pv of perpetuity = $10000/4.75%

=$210526 therefore this is the amount to be invested for a forever $10000 stream of incomes for a scholarship.

the relationship is indirect cause as the interest rate decreases the present value of the perpetuity that must be invested increases.

3 0

3 years ago

There are some 200 economic integration agreements around the world today, far more than a few years ago.NAFTA, EU, Asean etc. V

kicyunya [14]

Answer:

Economic integration agreement is when countries within a particular geographical area decide to remove or relax tariff or non-tariff barriers to trade between themselves and also to coordinate and harmonize their fiscal and economic policies. Free trade area is the simplest form of an economic integration; it is when governments of member countries agree to remove trade restriction between each other and when member countries are given the freedom to determine their own external trade policies towards non-members.

Supporters of free trade area argue that it is beneficial to the country based on the trade creation argument. Trade creation is where high-cost domestic production is replaced by more efficiently produced imports from within the group; that is, more expensive domestic products are replaced by lower priced imports from countries within the group. The trade creation argument is hinged on the fact that a free trade area ensures that trade is generated over and above what would otherwise have happened if there was no integration. Further, the removal of tariffs allows members to specialize in those products for which they have a comparative advantage leading to a variety of cheap imports for domestic consumers, thereby increasing living standards or welfare gains. Trade creation also creates an incentive for high cost domestic producers to cut cost so as to remain competitive thereby enhancing efficiency.

On the other hand, a free trade area is criticized on the basis of trade diversion. This is where trade with a low-cost country outside the group is influenced by higher–cost products supplied from within the group; this results in a less efficient allocation of resources as trade from outside the group is replaced by trade from within the group. Trade diversion could mean that local consumers would have to buy products at less competitive prices. Another argument would be that a free trade area would lead to a removal of tariff between member countries thereby resulting in a cessation of government revenue from tariffs. As opposed to a free trade area, free trade would increase world output and employment, raise quality and lower prices of goods as firms have access to factor inputs; it will also increase world living standards or enhances welfare gains. A free trade agreement only restricts these potential advantages to a particular geographical space.

Explanation:

8 0

3 years ago

Presented here are liability items for Skysong, Inc. at December 31, 2017. Accounts payable $298,300 FICA taxes payable $14,820

lord [1]

Answer:

Explanation:

The preparation of the liabilities section of Skysong's balance sheet is shown below:

Skysong, Inc.

Partial Balance Sheet

December 31, 2017

Liabilities

Current Liabilities

Accounts payable $298,300

FICA taxes payable $14,820

Notes payable (due May 1, 2018) $38,000

Interest payable $76,000

Unearned rent revenue $456,000

Income taxes payable $6,650

Sales taxes payable $3,230

Total Current Liabilities $893,000

Non - Current Liabilities

Bonds payable (due 2021) $1,710,000

Notes payable (due 2019) $152,000

Discount on bonds payable $77,900

Total Non -Current Liabilities $1,939,900

Total liabilities $2832,900

7 0

3 years ago

Albert jones went to his local department store to purchase a pair of levi's. he thought that the style of levi that he wanted w

geniusboy [140]

The behavior of Albert is consistent with the law of demand.

The basic law of demand says that the higher the price of a commodity, the lower the quantity demanded; and the lower the price of a commodity, the higher the quantity demanded.

Albert went to his local store, hoping to buy a pair of Levi's for $30, however, when he got there, the price was lower at $18, he then decided to buy more than one because the price was lower. This is the law of demand taking place.

6 0

3 years ago