1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Usimov [2.4K]
3 years ago
13

Compute the modified duration of a 9% coupon, 3-year corporate bond with a yield to maturity of 12%.

Business
1 answer:
iragen [17]3 years ago
6 0

Answer:

C. 2.45

Explanation:

Pv of cash flow

1000x9%/(1+0.12)

= 90/1.12

= 80.36

Weight = 1

Weighted pv of cash flow = 80.36

Pv of cash flow

= 1000x9%/(1+0.12)²

= 90/1.2544

= 71.75

Weight = 2

Weighted pv of cash flow = 71.75x2

= 143.5

Pv of cash flow

= (1000+1000*9%)/(1+0.12)³

= 1090/1.404928

= 775.84

Weight = 3

Weighted pv of cash flow

= 775.84x3

= 2327.52

Total pv of cash flow = 80.36+71.75+775.84

= 927.95

Total weight of cash flow pv =

80.36+143.5+2327.52

= 2551.38

Duration = weighted pv/pv

= 2551.38/927.95

= 2.75

Modified duration =

Duration/1+0.12

= 2.75/1.12

= 2.45

You might be interested in
Ethical conduct in the procurement process is particularly important to ensure fair and competitive in-theater acquisition effor
RideAnS [48]

Answer:

True

Explanation:

Under Prevention of Fraud, Waste, and Abuse of operational contract support,Ethical conduct in the procurement process is particularly important to ensure fair and competitive in-theater acquisition efforts and ensure these processes do not have a negative impact on the jfc's mission. problems affecting any aspect of the acquisition process can affect timely provision of support to the commander and in some cases negatively impact the civil-military aspects of the operation or campaign.

3 0
3 years ago
How do supply and demand influence market price?
rosijanka [135]

Answer:

The answer would be D) The market clearing price is where quantity demanded is equal to quantity supplied.

Explanation:

5 0
2 years ago
What does it mean to describe deposit insurance as undermining market discipline​? Because ▼ most few depositors are fully​ insu
Katena32 [7]

Answer:

most

little

risk taking

regardless of

Explanation:

The FDIC insures the deposits of depositors.

The Federal Deposit  Insurance Corporation (FDIC) was established after the great depression. Bank run was attributed to be one of the causes of the great depression. The FDIC increases confidence of depositors in banks because they insure the deposit of bank customers. In the case a bank fails, customers are assured that they would not lose their monies deposited

Because banks knows that the deposit of customers are insured, it increases their risk taking. this is known as adverse selection

7 0
3 years ago
have anyone seen the new resident evil welcome to raccoon city trailer if anyone answer this will get brianlist
____ [38]

Answer:

Explanation:

yup !! its so cool fr

8 0
2 years ago
Assume that a pure monopolist and a purely competitive firm have the same unit costs. In this case, determine what is true with
grandymaker [24]

Answer:

a. 1, 5 and 7

b. Resources will be allocated inefficiently

c. Differing sizes and capacities

d. Benefits due to economies of scale

e. Reduce prices and improve resource allocation.

Explanation:

The correct combination is 1, 5 and 7. The price of a pure monopoly firm is much higher than that of purely competitive firm because the later is a price taker while the former is a price fixer. Because of this, output of monopoly is lower while the profit margin is higher than that of competitive firm.

Assuming that a pure monopolist and a purely competitive firm have the same unit costs. In the case of a pure monopolist, resources will be allocated inefficiently because the monopolist does not produce at the point of minimum Average Total Cost and does not equate price and Marginal cost.

Even though both monopolists and competitive firms follow the MC = MR rule in maximizing profits, there are differences in the economic outcomes because pure competitors lack capacity and are smaller in size while the monopolist has the capacity to expand inorder to maximize profits.

The costs of a purely competitive firm and a monopoly may be different because the monopolist is capable of taking advantage of cost reduction arising from economics of scale. Pure competitors does not experience economies of scale due to their small sizes.

If a monopoly can experience economies of scale, it can reduce prices beyond that of the pure competitor thereby ensuring a more efficient resource allocation.

5 0
3 years ago
Other questions:
  • g Donald’s employer fires Donald after only four months on the job, a clear breach of Donald’s written twelve-month employment c
    15·1 answer
  • The Allowance for Doubtful Accounts: Multiple Choice Is credited when bad debts expense is estimated and recorded. All of the op
    11·1 answer
  • The strategy of setting a single price for two or more units is known as
    8·2 answers
  • Consider the recorded transactions below.
    6·1 answer
  • Consider a bundle of 325 brownies and 300 cookies. How do we label this production bundle?
    15·1 answer
  • Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk? a. Policymak
    11·1 answer
  • A machine would cost $100,000, and would generate revenues of $21,000 per year. However, O&M costs would be $7,000 per year.
    11·2 answers
  • What is most likely to happen if the Fed prints too much currency?
    8·1 answer
  • True or false. leadership in a team is a key component to team success.
    6·1 answer
  • If $1,000 was deposited today at a rate of 15%, its future value in one year would be
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!