A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 9.40%. (Do not round int
1 answer:
Answer and Explanation:
The computation of the yield to maturity is shown below:
a. When the bond sale price is $1,040
Given that
FV = $1,000
PV = $1,040
PMT = $1,000 × 9.40% = $94
NPER = 20
The formula is shown below:
= RATE(NPER;PMT;-PV;FV;TYPE)
After applying the above formula, the yield to maturity is 8.9630%
b. When the bond sale price is $1,000
Given that
FV = $1,000
PV = $1,000
PMT = $1,000 × 9.40% = $94
NPER = 20
The formula is shown below:
= RATE(NPER;PMT;-PV;FV;TYPE)
After applying the above formula, the yield to maturity is 9.4%
c. When the bond sale price is $1,240
Given that
FV = $1,000
PV = $1,240
PMT = $1,000 × 9.40% = $94
NPER = 20
The formula is shown below:
= RATE(NPER;PMT;-PV;FV;TYPE)
After applying the above formula, the yield to maturity is 7.1144%
You might be interested in
Answer
The answer and procedures of the exercise are attached in the image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Answer: Economic choices result in trade-offs.
Explanation:
The chart simply purports to show that when making economic decisions, you will have to accept trade-offs because resources are not infinite.
For instance, in order to expand, you will need to take on more financial risk. In that same vein, in order to serve more people, you will have to divide time between two stalls and might end up closing a stall.
Trade-offs simply have to be made.
