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KonstantinChe [14]
3 years ago
12

vA $1,000 three-year par-value bond yields an effective annual interest rate of 6%. Coupons are paid on an annual basis at a rat

e of 5% per year. Determine the modified convexity of the bond
Business
1 answer:
AveGali [126]3 years ago
4 0

Answer:

10.00

Explanation:

We haven = 3

Pv = 1000

Rate if interest = 6%

Coupon = 5% x 1000

= 50

∆y = assumed to be 1%

The formula for convexity =

(V- + V+)-2Vo/Vo+(∆y)²

We first solve for Vo

Using the financial calculator

Vo = 973.26

Then we solve for V-

Pv = 1000

Pmt = 50

I = 5%

n = 3

V- = 1000

We solve for V+

I = 7%

Pmt = 50

N = 3

V+ = 947.51

Then the convexity is gotten by putting these values into the formula

= (1000+947.51)-2x973.26/973.26x(1%)²this is approximately

10

Please check attachment for more details

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3 years ago
15 points & Brainliest! please show your work first & explain why & how you got it. Alegbra 2 questions!
jasenka [17]
18a.

the y-intercept is the value of the function at x = 0.
so y-intercept is 5/8.

constant multiplier you can find by dividing a y-value by the previous y-value:

(y at x = 1) / (y at x = 0) is
(15 / 32) / (5 / 8)
but dividing by fraction is same as multiplying by reciprocal:

(15 / 32) · (8 / 5) ⇒ (15 · 8) / (32 · 5) ⇒ (3 · 1) / (4 · 1) = 3/4
(since 15 and 5 cancel to 3 and 1; 8 and 32 cancel to 1 and 4

the constant multiplier is 3/4 (you can confirm by repeat multiplying the y-values by 3/4 to get the next one)

18b.

y-intercept is 0.01

constant multplier:

(y at x = 1) / (y at x = 0) = 0.1 / 0.01 = 10

constant multiplier is 10

18c.

y = m/n(o/p)^x

y intercept is at x = 0:
y = m/n(o/p)^0
since anything to power of 0 is 1, we are left with
y = m/n

y-intercept is m/n.

The constant multiplier is o/p

i don't really have news papers or magazines around for that last bit, but if you could look for population data and such they can be exponential.



7 0
3 years ago
The two-stage dividend growth model evaluates the current price of a stock based on the assumption a stock will:_____.
wolverine [178]

The two-stage dividend growth model assesses a stock's present price based on the presumption that it will increase in value at a different rate eternally after growing at a fixed rate for a set period of time.

The payout increases steadily in the first phase for a predetermined period of time. In the second, it is presumable that the dividend will increase at a different pace for the rest of the company's existence.

A mathematical technique called the dividend growth model allows investors to determine a realistic fair value for a company's stock based on its current dividend payout and projected dividend growth in the future.

Learn more about two-stage dividend growth model here.

brainly.com/question/28202802

#SPJ4

4 0
1 year ago
Tryst Energy Inc. has an average age of inventory of 65 days, an average collection period of 60 days and an average payment per
zzz [600]

Answer:

The $600,000 amount is required to financing so that the cash conversion cycle can be supported

Explanation:

For computing how much financing is required, first we have to compute the cash conversion payable which is shown below:

Cash conversion cycle = Average age of inventory + Average collection period - average payment period

= 65 + 60 - 65

= 60 days

Now, we have to apply the financing formula which is shown below:

= Firm total annual outlays for operating cycle investment × cash conversion cycle ÷ total number of days in a year

= $3,650,000 × 60 days ÷ 365

= $3,650,000 × 0.16438

= $600,000

Hence, the $600,000 amount is required to financing so that the cash conversion cycle can be supported

4 0
3 years ago
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