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ololo11 [35]
3 years ago
6

Jane Smith, MD, has had a great year in her pediatrics practice and has cash that she wants to invest. Her financial adviser sug

gests she buy a seven-year, $1,500 par value bond with an annual coupon rate of 10 percent and three years remaining to maturity. Dr. Smith decides to explore her options. She discovers that new, similarly risky bonds have an average annual rate of return of 12 percent. Bank certificates of deposit are returning 5 percent annually on average while a mutual fund investing in high-risk-growth stocks has an average annual rate of return of 20 percent. If Dr. Smith follows her financial adviser’s advice, what is the maximum amount she should pay for the bond? Explain your answer
Business
1 answer:
Arlecino [84]3 years ago
3 0

Answer: $1427.95

Explanation:

If Dr. Smith follows her financial adviser’s advice, the maximum amount that she should pay for the bond will be calculated thus:

This question can be solved using Excel.

Face value = $1500

Coupon rate = 10%

Years left = 3

Coupon = 10% × $1500 = $150

Yield to maturity = 12%

The bond price will be:

= PV(12%,3,-150,-1500)

= PV(0.12,3,-150,-1500)

= 1427.95

The bond price is $1427.95

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The appropriate response is two strengths and one threat. Jake had two qualities (these are inward to the operation): (1) $100,000 financing, (2) three talented installers. He had one danger (outer to the operation): (1) poor economy prove by almost no new development and property dispossessions
6 0
3 years ago
Assume the money supply is $500, the velocity of money is 8, and the price level is $2. Using the quantity theory of money:
LiRa [457]

Answer:

a) 2000

b) 4000

c) 2000 and 4800

Explanation:

The quantitative theory of money shows how the monetary side of an economy behaves, that is, the effect of money supply on income. It is given by the equation MV = PY, where M = money supply, V is the currency's velocity, P is the price level and Y is the real income level.

M = 500, V = 8, P = 2

a) The real income level:

MV = PY

500 x 8 = 2 x Y

Y = 2000

b) Nominal income level (price level multiplied by real income)

PY

2 x 2000 = 4000

C) If the money supply increases by 20%, ie to 600, the real income will be:

MV = PY

600 x 8 = 2.4 x Y (Y is full employment income, so the effects of money supply will be on the price level)

Y = 2000 Real income remains the same, increase in money supply does not affect real output, only price level, which increases from 2 to 2.4.

The nominal income, in turn, will be:

PY

2.4 x 2000 = 4800

That is, an increase in the money supply only increases nominal income.

3 0
3 years ago
What two things should Zara keep in mind to make sure that the food her restaurant serves is free of chemical contaminants?
aivan3 [116]
Don’t keep food near cleaning liquids

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6 0
3 years ago
A cruise ship with a mass of 1.00×107kg strikes a pier at a speed of 0.750 m/s. It comes to rest 6.00 m later, damaging the ship
pickupchik [31]

Answer: The required force = 4.7 x 105 N

Explanation:

Mass of the ship m = 1.00 x 107 Kg

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Final speed v = 0 m/s

Average speed s =( 0.750 + 0) / 2 = 0.375 m/s

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= \frac{6}{0.375}

= 16 s

Average force exerted on the pier F =\frac{m(v - u )}{t}

F  = \frac{1.00 x 107 ( 0 - 0.750 )}{16}

F  = - 4.7 x 105 N

Hence the required force = 4.7 x 105 N

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I am going to say c is the answer
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