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
Karo-lina-s [1.5K]
2 years ago
8

An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has

a yield to maturity of 8.9%. Bond C pays a 10% annual coupon, while Bond Z is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 8.9% over the next 4 years, calculate the price of the bonds at each of the following years to maturity.
Years to Maturity Price of Bond C Price of Bond Z
4 $ $
3 $ $
2 $ $
1 $ $
0 $ $
Business
1 answer:
aliya0001 [1]2 years ago
4 0

Answer:

Years to maturity       Price of Bond C            Price of Bond Z

         4                               $1,084.42                       $711.03

         3                               $1,065.93                       $774.31

         2                               $1,045.80                      $843.23

         1                                $1,023.88                       $918.27

Explanation:

Note: See the attached excel for the calculations of the prices of Bond C and Bond Z.

The price of each bond of the bond can be calculated using the following excel function:

Bond price = -PV(rate, NPER, PMT, FV) ........... (1)

Where;

rate = Yield to maturity of each of the bonds

NPER = Years to maturity

PMT = Payment = Coupon rate * Face value

FV = Face value

Substituting all the relevant values into equation (1) for each of the Years to Maturity and inputting them into relevant cells in the attached excel sheet, we have:

Years to maturity       Price of Bond C            Price of Bond Z

         4                               $1,084.42                       $711.03

         3                               $1,065.93                       $774.31

         2                               $1,045.80                      $843.23

         1                                $1,023.88                       $918.27

Download xlsx
You might be interested in
In the short run, a perfectly competitive firm should shut down whenever minimum average variable cost exceeds price minimum ave
Pepsi [2]

Answer:

A. minimum average variable cost exceeds price.

Explanation:

In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.

This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.

Hence, a perfectly competitive market is characterized by the following features;

1. Perfect information.

2. No barriers, it is typically free.

3. Equilibrium price and quantity.

4. Many buyers and sellers.

5. Homogeneous products.

Examples of a perfectly competitive market are the Agricultural sector, e-commerce and the foreign exchange market

In the short run, a perfectly competitive firm should shut down whenever minimum average variable cost exceeds price.

However, the firms always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.

6 0
3 years ago
67 people of 350 surveyed gave your company five stars. Of men, 40 out of 175 gave your company five stars. Was your company rat
marishachu [46]

Answer:

The company was rated 5 stars more by Men

Explanation:

Given that

General population = 67/350

Men = 40/175

In checking the percentage ratio, we have

a. General population

= (67/350) × 100

= 19.14%

b. Men population

= (40/175) × 100

= 22.85%

Thus, seeing that 22.85% > 19.14%, therefore, company was rated 5 stars more among the men population.

5 0
2 years ago
Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on lar
marishachu [46]

Answer:

Darcy should replace the lift

Explanation:

Scenario 1: Darcy Roofing keeps the old lift

refurbishing costs ($31,000)

no other changes in revenues or costs*

net cash flow = ($31,000)

*The $67,200 spent repairing the lift the previous year are considered sunk costs because they cannot be recovered regardless of what decision the company makes.

Scenario 2: Darcy Roofing purchases a newer lift

cost of newer lift ($132,500)

salvage value of old lift $19,500

reduced costs per year x 6 years = $22,400 x 6 = $134,400

additional rental income x 6 years = $8,000 x 6 = $48,000

net cash flow = $69,400**

**Since we are not given any discount rate, we cannot discount the cash flows to determine the present value of the project. With a discount rate of 0, the NPV of purchasing the lift is much higher than the alternative of keeping the old lift.

3 0
2 years ago
In your discussion post, think about some examples of exponential growth in the real world. They might be examples from science,
Stels [109]

Answer: interest and population growth

Explanation:

Examples of exponential growth in real world.

1. interest on a savings account (finance). example when you deposit let say $1000 in an account that earns you a simple interest rate of 10% in a year you would earn $100, with each year the amount of interest paid continues to grow exponentially. The bank customer or owner of the account stands to benefit from this growth.

2. Population growth ( science ) population continues to grow exponentially overtime due to individuals available to produce not minding the available resources.a large population usually translates to a good economy development due to more people available so the citizen benefits from it.

Examples of career that it would be difficult to work in

1. Financial advisor

2. Bankers

For someone working as a financial advisor or banker would need the knowledge of exponential growth by understanding compound returns. In finance, compound returns leads to exponential growth. Compounding powers is part the most powerful tools in finance. This method is used by financial advisors and bankers for creating large sums from an initial deposit.

3 0
3 years ago
Suppose the city of Austin, TX chooses to regulate the number of street vendors operating near the University of Texas by requir
Dmitrij [34]

Answer:

economic rent of $65,000

Explanation:

Economic rent is the amount of money paid in excess to a factor of production in excess of what is socially optimum

Economic rent = $150,000 - $85,000 = $65,000

Accounting profit= total revenue - explicit cost

Total revenue =price x quantity sold  

Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials

Economic profit = accounting profit - implicit cost

Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

Without the regulation, economic profit would be driven to zero.

8 0
3 years ago
Other questions:
  • Joana volunteers to deliver a last-minute presentation on behalf of her team. Which quality is Joana demonstrating?
    12·2 answers
  • What is the expected salary range for ocean engineer from entry level to being at the top of their field?
    8·1 answer
  • 3. Hari Seldon is planning for his retirement 6 years from now. He plans to deposit $30000 each year for 6 six years (i.e., 6 de
    8·1 answer
  • Solve 2x + 0.03x = 255​
    7·1 answer
  • Which of the following is the reason behind the slow growth in U.S. incomes during the 1970s and 1980s?
    12·1 answer
  • 1. Sheetz Company is purchased by Pulsar Corporation, at an acquisition cost that is $25,000,000 greater than the fair value of
    9·1 answer
  • True/False: the two most common means of acquisition are the entrepreneur's direct purchase of the firm's entire stock or assets
    11·1 answer
  • In an effort to raise more tax revenue from the upper class, the government decides to impose a new tax on luxury goods like yac
    13·1 answer
  • Check all true statements regarding CMBS:
    5·2 answers
  • Plano Co. 12/31/2021
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!