The answer you are looking for is C. meet the needs and wants of the customer.
Answer:
Bond price= $1,210.4
Explanation:
Giving the following information:
Coupon rate= 0.079/2= 0.0395
YTM= 0.056/2= 0.028
Face value= $1,000
n= 13*2= 26
<u>To calculate the price of the bond, we need to use the following formula:</u>
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond price= 39.5*{[1 - (1.028^-26)]/0.028} + [1,000 / 1.028^26]
Bond price= 722.67 + 487.73
Bond price= $1,210.4
Answer:
1 year rate 2 year from now = 12% (Approx)
Explanation:
Given:
1-year rate = 8%
2-year rate = 9%
3-year rate = 10%
Computation:
According to Pure Expectations Hypothesis,
(1 + 3-year rate)³ = (1 + 2-year rate)² (1 + 1 year rate 2 year from now)
(1.10)³ = (1 + 1.09)²(1 + 1 year rate 2 year from now)
1.331 = 1.1881 (1 + 1 year rate 2 year from now)
(1 + 1 year rate 2 year from now) = 1.12
1 year rate 2 year from now = 0.12
1 year rate 2 year from now = 12% (Approx)
Answer:
23.25%; 62.01%
Explanation:
(a) Amount received:
= No. of shares × selling price
= 100 × $43
= $4,300
Sales deposit = 60% of Amount received
= 0.6 × $4,300
= $2,580
Amount paid = No. of shares × Purchase price
= 100 × $49
= $4,900
Therefore, Loss = $4,900 - $4,300
= $600
(b) If buys at $27, then
Amount paid = $27 × 100
= $2,700
Profit = $4,300 - $2,700
= $1,600
Loss on investment:
= ($600 ÷ $2,580) × 100
= 23.25%
Profit on investment:
= ($1,600 ÷ $2,580) × 100
= 62.01%
