Identify whether each of the following examples belongs in M1 or M2. If an example belongs in both, be sure to check both boxes.

A 20-year maturity, 7.6% coupon bond paying coupons semiannually is callable in seven years at a call price of $1,170. The bond

g100num [7]

Answer:

a) YTC 5.895%

b) YTC being call at 1,120 6.6853%

c) we change time and call price 1,170 = 5.33189%

Explanation:

we have to calculate with excel for the PV of the coupon payment and the call price which matches the the

First we calculate the price of the bond:

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 38.000 1,000 x 7.6% / 2

time 40 (20 years x 2payment per year )

rate 0.033

$38 \times \frac{1-(1+0.033)^{-40} }{0.033} = PV\\$

PV $837.2785

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 1,000.00

time 40.00

rate 0.033

$\frac{1000}{(1 + 0.033)^{40} } = PV$

PV 272.89

PV c $837.2785

PV m $272.8897

Total $1,110.1682

Now we solve for the YTC

given a price of 1,110 we receive an annuity of 38 dollars during 7 years and recieve 1,170

we do it in excel:

=PV(A2;14;38)+1,110.17/power(1+A2;28)

the first part is the coupon payment the second maturity

now we solve using goal seek to make this formula worth 1,170 changin a2 which is when we put a rate reference

a) 0.058950255

b)

=PV(A2;14;38)+1,110.17/power(1+A2;28)

we determinate our target as 1,120

0.066853426

c) we change time:

=PV(A2;8;38)+1,110.17/power(1+A2;8)

0.053318904

4 0

2 years ago

Which of the following actions can be an example of a signal designed to reduce the impact of asymmetric information? A. A money

VladimirAG [237]

Answer: Option (A) is correct.

Explanation:

From the given options, the following actions can be an example of signal designed to reduce the impact of asymmetric information: Money-back guarantee.

A money-back guarantee can be referred to as an essential that guarantee, if a consumer/individual is not satisfied with commodity or service, refund to the respective account will be made. Money-back guarantee reduces the impact of asymmetric information between a consumer and seller.

5 0

2 years ago

for a monopolist: a. price equals average total cost. b. price is above marginal revenue. c. marginal revenue equals zero. d. ma

FromTheMoon [43]

For a monopolist, price is above marginal revenue.

<h3>What is monopolist market?</h3>

A monopolist market is a market with managed alone.

The price of commodity should be greater than marginal revenue this is because until marginal revenue and cost are balance the business cannot expand.

But a high price above the revenue will equal to profit.

Learn more on monopolist market below

brainly.com/question/13113415

#SPJ1

3 0

1 year ago

Read 2 more answers

Jack, Jamie, Ronnie, and Stephan own the only computer software manufacturing companies in the country. When Jack increases the

Likurg_2 [28]

Answer: Perfect Competition

Explanation:

This is a situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent.

6 0

3 years ago

Read 2 more answers

The ratio of cash to monthly cash expenses can be used to _____. a.assess how long a company with negative cash flows from inves

sp2606 [1]

Answer:

The correct option is C. which is assess how long a company with positive cash flows from financing activities can continue to operate

Explanation:

The ratio of cash to monthly cash expenses can be used to make assessment of a company whether how long it can determine without additional financing and positive cash flows generated from operations.

The formula of The ratio of cash to monthly cash expenses

= Cash s of year end ÷ Monthly Cash Expenses

5 0

2 years ago