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azamat
3 years ago
14

One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 6.7% annual coupon bonds at their par value of $1,000. Today,

the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity
Business
1 answer:
Maksim231197 [3]3 years ago
7 0

Answer:

Bond Price = $1115.075775 rounded off to $1115.08

Explanation:

To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is an annual bond, the coupon payment, number of periods and annual YTM or market interest rate will be,

Coupon Payment (C) = 1000 * 0.067  = $67

Total periods (n) = 14  

r or YTM = 0.055  or  5.5%

The formula to calculate the price of the bonds today is attached.

Bond Price = 67 * [( 1 - (1+0.055)^-14) / 0.055]  + 1000 / (1+0.055)^14

Bond Price = $1115.075775 rounded off to $1115.08

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Answer:

The correct answer is letter "A": in both statements I and II.

Explanation:

(I) According to the demand law, <em>if the price of tea increases the quantity demanded of tea will decrease</em>. If the price of tea decreases, the quantity demanded of tea will increase. Quantity demanded and the price has an inversely proportional relationship in the demand law.

(II) When talking about complementary goods like tea and sugar, <em>if the price of tea increases will result in a negative movement along the demand curve of tea and will cause the demand curve of sugar to move inwards. In such a scenario, the demand for each good will be reduced.</em>

8 0
3 years ago
On November 1, 2018, Master's Co. borrows $500,000 from its bank for five years at an annual interest rate of 10%. According to
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b. Liabilities are understated by $4,167 accrued interest payable

Explanation:

7 0
3 years ago
A year ago, Phyllis Peterson purchased 100 shares of Fidelity's Contrafund for $50 each. During the year, her total return from
Y_Kistochka [10]

Phyllis' RATE (percentage) of return is 7 percent

<u>Explanation:</u>

Data provided in the question:

Purchase price for each share = $50

Dividend received = $1 per share

worth of shares at the end of year = $52.50

Thus, total return on the share  = dividend received plus worth of sahres at the end of year minus purchase price

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= [$3.5 by $50] inot 100 percent

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6 0
3 years ago
Pizza Hut's website __________ are integrated with the company's overall communications programs - including traditional media -
Morgarella [4.7K]

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e. content; communications

Explanation:

The website content refers to all multimedia and text found on it. Content should always be relevant and aligned with the company's overall communications plan.

A key part of<u> </u><u><em>integrated marketing communications (IMC)</em></u> is the fact that a company should have all of its media deliver a consistent marketing message.  That applies to the website's content and communications too, as it must integrate those factors with other media and platforms. All the media should cover the same topics - company promotions, product innovation or special customer incentives.

<em>Context, commerce </em>and<em> connection</em> are irrelevant terms for the IMC concept.

4 0
3 years ago
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anastassius [24]

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I hope my answer helps you

7 0
3 years ago
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