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ololo11 [35]
2 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]2 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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SSSSS [86.1K]

Answer: Option (d) is correct

If consumption increases, the AD curve will shift rightward, which will increase the price level.

Explanation:

If the consumption increases in an economy as a result there is a rightward shift in the aggregate demand curve. This shift in the aggregate demand curve lead to increase in the price level as well as in the output level.

Because there is more demand in the economy which gives an advantage for the producer to charge higher price.

3 0
3 years ago
ransfers real estate worth $180,000 (basis of $40,000) andservices (worth $20,000) rendered in organizing the corporation. Each
MrRissso [65]

Answer:

Emily has a basis of $60,000 in the shares of Red Corporation.

Explanation:

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Even though both Emily and Sarah received 600 shares each, the basis for her tax calculations are different.

3 0
3 years ago
Mrs. Eller's corporate employer has a cafeteria plan under which its employees can receive a $3,000 year-end Christmas bonus or
Alina [70]

Answer and Explanation:

a. The computation is shown below;

Cash bonus after tax is ($3,000 × (1 - 0.24) $2,280

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b. Yes answer would be changed

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4 0
3 years ago
A 2-year bond with par value $1,000 making annual coupon payments of $106 is priced at $1,000. a. What is the yield to maturity
shutvik [7]

Answer:

Explanation:

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yield to maturity = (106/1000) x 100

= 10.6 % .

8 0
3 years ago
The annual percentage rate on a credit card determines
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My answer -

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Not carrying a balance means that you don’t pay interest.


p.s

Let me know if you need anymore help on brainly so I can help you again. Have an AWESOME!!! day :^)


6 0
3 years ago
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