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
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

You might be interested in
Shareholders are sometimes referred to as disenfranchised, or having synthetic ownership . What does this mean
artcher [175]

When shareholders are referred to as disenfranchised or having synthetic ownership it means that the shareholders while owning the majority stock have the real right in selling the stock and not in possession.

<h3>What is disenfranchised or synthetic ownership of stock?</h3>

Disenfranchise or synthetic ownership means that shareholders do not own the underlying stock but have the right to sell, thereby providing them with consistent cash flows.

Thus, when shareholders are referred to as disenfranchised or having synthetic ownership it means that the shareholders while owning the majority stock have the real right in selling the stock and not in possession.

Learn more about stock ownership at brainly.com/question/25818989

3 0
3 years ago
Rocky Mountain Races, Inc., sponsors the "Pioneer Trail Ultramarathon," with an advertised first prize of $10,000. The rules req
BARSIC [14]

Generally, in situations such as this where one person enters into a competition with a company or corporation with an explicitly defined prize, this constitutes a unilateral contract. Unilateral contracts are defined by the offering of a reward for a specifically defined act, and this contract is accepted when the contractee completes the act. In this case, Rocky Mountain Races, Inc., and Monica did have a uniform contract. Furthermore, because Monica entered the race and was declared the winner, she fulfilled her end of the contract thus accepting the contract (and qualifying for the reward from the contractor). However, because Rocky Mountain Races, Inc., included a provision that they could change the terms of the race at any time, Monica isn't entitled to the $10,000 reward, she is entitled to whatever reward Rocky sees fit.

3 0
4 years ago
The mm theory with taxes implies that firms should issue maximum debt. In practice, this does not occur because?
jeka57 [31]

The MM Theory with taxes implies that firms should issue maximum debt. In practice, this is not true because Bankruptcy is a disadvantage to debt.

The Modigliani-Miller theorem states that a firm's capital structure does not affect its value. The theorem states that market value is determined by the present value of future earnings. This theorem has been influential since it was introduced in the 1950s.

Full market investors can borrow for the same cost as they lend and invest rationally. It is also implied that the process has no transaction costs.

The mm theorem states that a company's capital structure is not a factor in its value. The theorem states that market value is determined by the present value of future earnings. This theorem has been influential since it was introduced in the 1950s.

Learn more about  MM Theory  here

brainly.com/question/16016282

#SPJ4

7 0
2 years ago
Which of the following is an advantage to belonging to a labor union?
alisha [4.7K]

Labor union protect the workers right and interest.

Firstly, let understand that labor union is basically an association of workers which can either be for a trade or profession, with the main objective of protecting members rights and interests

  • The major function of labor union is to help improve the lives of members by negotiating and determining the remuneration rate that should be provided to them such as wages, salaries, hourly rate, minimum wages etc.

Some advantage of Labor union for workers are:

  1. Its helps to protect the interest of workers.
  2. Its helps to negotiate and promote higher wages and better benefits.
  3. Its help to ensure workplace safety.
  4. The union serves as workers representatives.

Learn more about Labor union here

<em>brainly.com/question/453055</em>

7 0
2 years ago
In what way do businesses commercialize cinco de mayo?.
KiRa [710]

The businesses commercialize cinco de mayo in way that they focused on the number 5 i.e. giving 5% discount, get 4 with 5th free, 5% off and also provided mexican food.

<h3>What is cinco de mayo?</h3>

Cinco de mayo is event that took place in mexico that was the war between america and mexico on 5th of may. Now people celebrate it as there holiday.

Business commercialize Cinco de mayo in the way that they stated extensive maketing campaign and selling mexican foods, drinks, services etc.

Learn more about marketing here:

brainly.com/question/13414268

#SPJ4

5 0
3 years ago
Other questions:
  • Schedule of Cash Collections on Accounts Receivable and Cash Budget
    7·1 answer
  • The financial perspective of the balanced scorecard is concerned with
    8·1 answer
  • A situation that arises when all alternative choices or behaviors have been deemed undesirable because of the potentially negati
    5·1 answer
  • The company intends to classify these costs and expenses into the following categories: (a) direct materials, (b) direct labor,
    6·1 answer
  • The County Auditor is the Chief ____ Officer of a county.
    5·1 answer
  • Which one of the following forms of commission rate may actually result in overselling and higher selling costs to the company?
    7·1 answer
  • What are the causes of xenophobia​
    15·2 answers
  • WHY AM I SO WISH UGLY&gt; IT SO SAD NO ONE FINDS ME ATTRACTIVE
    7·1 answer
  • Julianna works in an on-the-job training program under the supervision of an experienced Electrical Power-Line
    6·1 answer
  • Timir is hired to work at as a manager for flaxon corporation. he is responsible for providing daily reports on his team's perfo
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!