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Damm [24]
3 years ago
15

A bond has $1,000 face value, coupon rate of 5.6%, and yield to maturity (YTM) of 5.8%. It will mature in 15 years and the inter

est rate will compound semiannually. What is this bond’s current yield? Group of answer choices 4.99% 2.50% 5.71% 2.86%
Business
1 answer:
ollegr [7]3 years ago
6 0

Answer:

Current Yield of the bond = 0.057134 or 5.7134% rounded off to 5.71%

Explanation:

A current yield refers to the annual return that a security provides based on the interest or dividend payments it makes expressed as a percentage of it current price. Thus, the current yield on bond can be calculated as follow,

Current Yield - bond = Interest payment per year / Current price

To calculate the current yield, we need the present value or current price of the bond.

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 a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,

Coupon Payment (C) = 1000 * 0.056 * 6/12  = $28

Total periods (n) = 15 * 2 = 30  

r or YTM = 0.058 * 6/12 = 0.029 or 2.9%

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

Bond Price = 28 * [( 1 - (1+0.029)^-30) / 0.029]  + 1000 / (1+0.029)^30

Bond Price = $980.143753 rounded off to $980.14

Current Yield of the bond = (28 * 2)  /  980.14

Current Yield of the bond = 0.057134 or 5.7134% rounded off to 5.71%

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Frictional and structural unemployment can be alleviated by implementing a supply-side policy such as 19) A) * decreasing govern
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Answer: the government giving tax breaks to companies locating in poor geographic areas.

Explanation:

4 0
3 years ago
On June 27, 2021, Cara Van Travel distributed to its common shareholders 510,000 outstanding common shares of its investment in
Phoenix [80]

Answer:

The correct answer is $255,000.

Explanation:

According to the scenario, the given data are as follows:

Total outstanding shares = 510,000

Shares value before = $3.10

Shares value after deal = $3.60

So, we can calculate the amount of gain on disposal by using following formula:

Gain amount on disposal = Total number of shares × Difference in share value

By putting the value, we get

= 510,000 × ( $3.60 - $3.10)

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6 0
3 years ago
The Rogers Corporation has a gross profit of $746,000 and $305,000 in depreciation expense. The Evans Corporation also has $746,
allochka39001 [22]

Answer:

Net cash flow for The Rogers Corporation: $435,200

Net cash flow for The Evans Corporation: $332,400

Explanation:

For The Rogers Corporation:

Income before tax =  $746,000 - $305,000 - $224,000 = $217,000

Tax = $217,000 x 40% = $86,800

Net income afer tax = $217,000 - $86,800 = $130,200

Net cash flow = Gross profit - Selling and administrative expense - Tax = $746,000 - $224,000 - $86,800 = $435,200

For The Evans Corporation

Income before tax =  $746,000 - $48,000 - $224,000 = $474,000

Tax = $474,000 x 40% = $189,600

Net income afer tax = $474,000 - $189,600 = $284,400

Net cash flow = $746,000 - $224,000 - $189,600 = $332,400

5 0
3 years ago
The 2016 annual report for Mega Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015,
Ainat [17]

Answer:a. Total common stock issued is 750 millions

b. In treasury is 109 million

c. Outstanding 750 million.

Explanation:

Issued shares referred to the total amount of authorised shares that has been issued to the public for subscription.

Treasury stock refers to parts of the issued stock that are held up for the ownership of the issuing company.

Outstanding stock refers to the total number of stock issued and fully paid for from the issued stock.

4 0
3 years ago
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