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8090 [49]
3 years ago
12

You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quo

ted annual interest rate of 10 percent, which is paid semiannually. The yield to maturity on the bonds is 10 percent annual interest. There are 15 years to maturity. a. Compute the price of the bonds based on semiannual analysis. b. With 10 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds? (Please show all steps and explain)
Business
1 answer:
Dominik [7]3 years ago
6 0

Solution:

a.

N I/Y PV PMT FV

10 × 2 10 / 2 CPT

PV −1,000.00 100 / 2 1,000

10%/2=5% *1000= 50

n=20

i=5%

pmt 50

fv 1000

Answer: $1,000.00

b.

N I/Y PV PMT FV

5 × 2 10 / 2 CPT

PV −1,000.00 100 / 2 1,000

n=8

pmt 50

i 5%

fv 1000

Answer: $1,000.00

a.

Appendix D

Present value of interest payments:

PVA = A × PVIFA (5%, 20)

= $50 × 12.462

= $623.10

Appendix B

Present value of principal payment at maturity:

PV = FV × PVIF (5%, 20)

= $1,000 × .377

= $377.00

Bond price = $623.10 + 377.00

= $1,000.10

b.

Appendix D

Present value of interest payments:

PVA = A × PVIFA (5%, 10)

= $50 × 7.722

= $386.10

Appendix B

Present value of principal payment at maturity:

PV = FV × PVIF (5%, 10)

= $1,000 × .614

= $614.00

Bond price = $386.10 + 614.00

= $1,000.10

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You observe a portfolio for five years and determine that its average return is 12.5​% and the standard deviation of its returns
mihalych1998 [28]

Answer:

Yes, you can be confident that the portfolio will not lose more than 30% of its value next year

Explanation:

In this question , the average return of portfolio is 12.5% and the standard deviation is 19.5%. It is estimated that there will be 30% loss next year. The confidence interval is 95%.

Range = Average return ± 2 x Standard deviation Low aid = 12.5% - (2 x19.5%) =12.5% -39% = -26.5%

High end = 12.5% +(2 x19.5%) =12.5%+39% = 51.5%

Thus, the low end is

26.5%

The range of return at 95% confidence interval is -26.5% to 51.5%

8 0
2 years ago
19. An investor has purchased a property that is giving him a 10% rate of return. Potential gross rents total $10,000.00 a month
gogolik [260]

Answer:

the market value of the property is $628,300

Explanation:

The computation of the market value of the property is shown below;

Gross rent $10,000 × 12= $120,000

Now

= $120,000 ×  .92 (occupancy rate)

= $110,400

After that

= $110,400 - $47,570

= $62,830

And ,finally the market value of the property is

= $62,830 ÷ 0.10  

= $628,300

hence, the market value of the property is $628,300

4 0
2 years ago
Sharon is unhappy with her job as a salesperson at a retail store for many reasons. Yesterday a customer asked her where the sha
postnew [5]

Answer:

<u>Customer satisfaction.</u>

Explanation:

Customer satisfaction is an extremely relevant factor for a company as it can directly influence the success or failure of a business.

The whole experience that the customer will have with your company will influence their perception and decision to re-establish relationships with the organization. The company should pay attention to the set of determinants responsible for customer satisfaction, the product must meet their needs, service and service should be cordial and optimized to clarify doubts and assist in the process of purchase and customer loyalty.

So on that issue, an employee like Sharon will negatively impact customer satisfaction, which has not been answered and badly answered. What the organization can do to improve this cycle is to invest in employee training and motivational policies that help increase job satisfaction and thereby increase customer satisfaction.

6 0
3 years ago
TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at
statuscvo [17]

Answer:

Explanation:

Amount realized on sale:

Cash                                                                 $75,000

Purchaser’s note 675,000

                                                                                         $750,000

Adjusted basis (535,000)

Gain realized on sale $215,000

b. $215,000 gain realized ÷ $750,000 contract price = 28.67% gross profit percentage.

Cash received in year of sale:

Cash at closing                                             $75,000

August principal payment 33,750

                                                                                       $108,750

Gain recognized   (108750*28.67%) $31,179

A. Book gain                                     $215,000

Tax gain (31,179)

Book/tax difference                                       $183,821

B. $183,821 × 35% = $64,338 deferred tax liability

The excess of book gain over tax gain is a favorable difference.

6 0
3 years ago
Brainly took all of my answers away yesterday, cuz I got blocked! WHAT DO I DO 2 GET ThEM BACK !!?!?!? WILL GIVE BRAINLIEST.
devlian [24]

Answer: did you try logging in if so try to contact brainly by email

Explanation:

6 0
3 years ago
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