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alex41 [277]
2 years ago
7

There is a zero coupon bond that sells for $4,550.90 and has a par value of $10,000. If the bond has 18 years to maturity, what

is the yield to maturity'? Assume semiannual compounding.
A. 4.47%
B. 4.27%
C. 4.31%
D. 4.24%
E. 4.42%
Business
1 answer:
KIM [24]2 years ago
8 0

Answer:

E. 4.42%

Explanation:

Calculation for the yield to maturity

First step is to calculate the Current price using this formula

The Current price=Par value/(1+yield to maturity/2)^(2*Time period)

$4,550.90=$10,000/(1+yield to maturity/2)^(2*18)

(1+yield to maturity/2)^36=($10,000/$4,550.90)

1+yield to maturity/2=($10,000/$4,550.90)^(1/36)

Now let calculate the yield to maturity

Yield to maturity/2=1.0221092-1

Yield to maturity=0.0221092*2

Yield to maturity=0.0442*100

Yield to maturity=4.42%

Therefore the Yield to maturity will be 4.42%

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32.03%

Explanation:

Data provided as per the question

Net operating income = $42,930

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The computation of  return on investment (ROI) is shown below:-

Return on investment =net operating income ÷ average operating assets

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Therefore for computing the return on investment we simply divide average operating assets by net operating income.

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How we identify it’s a business?
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Consider the capital asset pricing model. The market degree of risk aversion, A, is 3. The risk premium is 2.25%. If the risk-fr
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Answer:

SO expected return on Mkt Portfolio Rm = 10.75%

Explanation:

market degree of risk aversion A = 3

Var = 0.0225 = SD^2

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Answer:

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a. A temporary increase in government purchases would result in a  reduction in savings, which would, in turn, lead to the implementation of higher taxes by the government so as to match prices and wages.

This would: make output to remain unchanged, real interest to increase and current price level to increase as well.

b. A reduction in expected inflation would lead to an increment in the demand for real money, as people do not expect inflation to increase for a while. Thus, more demand creates a reduction in the price level. Everything else remains unchanged. This would: make output remain unchanged, real interest remain unchanged and the current price level to decrease.

C. A temporary increase in labor supply would make more people have jobs and therefore more people can save. If more people save the interest rates are liable to decrease therefore money demand will increase. This would: make output to increase, real interest to decline and current price level to decrease.

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