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
tangare [24]
3 years ago
11

Find the duration of a bond that sells for $87 in the market. The bond pays semiannual coupons of $3 and the principle is $100.

The bond matures in 4 years.
Business
1 answer:
Lana71 [14]3 years ago
7 0

Answer:

In order to determine the Macauly we must complete the following table:

period      cash flow       PV of             Period x            

                                       cash flow      PV cash flow          

1                  $3                 $2.91                 $2.91

2                 $3                 $2.83                $5.66

3                 $3                 $2.75                 $8.25

4                 $3                 $2.67               $10.68

5                 $3                 $2.59               $12.95

6                 $3                 $2.51                $15.06

7                 $3                 $2.44                $17.08

8              $103                $81.31              $650.48

Total                                                        $723.07

Macauly duration = $723.07 / $87 = 8.31

Modified Macauly duration = Macauly duration / (1 + r) = 8.31 / 1.03 = 8.07

You might be interested in
A perpetual bond with a par value of $1,000 and a coupon rate of 7.75% has a current market price of $900. What is its yield to
photoshop1234 [79]

Answer: e. 8.61%

Explanation:

This is a perpetual bond so the price is calculable by;

Price = Coupon / Yield to Maturity

Coupon = 7.75% * 1,000

= $77.50

900 = 77.50/ YTM

900 * YTM = 77.50

YTM = 77.50/900

= 8.61%

6 0
3 years ago
Luciana is the first to offer a new product to customers in the local market and expects no competitors to emerge for at least t
storchak [24]

Answer:

skimming.

Explanation:

In this context, it can be said that Luciana will use the skimming pricing strategy.

This strategy consists of setting a relatively high price for the new product or service that will be offered in the market and then gradually lowering its price.

This strategy works by charging a high initial price that will be accepted by the first customers and after the first demand is satisfied, the price will be reduced to attract the most price sensitive customers.

8 0
3 years ago
For Wilton Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $720,000 of factory labor cos
Phoenix [80]

Answer:

Amount of overhead debited to Work in Process Inventory is $364,000

Explanation:

Direct labor cost = Total labor cost - Indirect labor cost

Direct labor cost = $720,000 - $200,000 = $520,000

Overhead debited to Work in Process Inventory= 70% * Direct labor cost

=70% * $520,000

=$364,000

6 0
4 years ago
The price of a stock fluctuates between $43 and $60. If the time frame referenced encompasses the primary trend, the $43 price m
Volgvan

Answer: support level

Explanation:

The support level and the resistance levels are used by analysts for the identification of price points on a chart where a pause or reversal of the prevailing trend is being favored by the probability.

The support level occurs in a scenario whereby there'll a pause of a downtrend because of the concentration of demand. Therefore, in this case, the $43 price may be considered the support level.

7 0
3 years ago
What is the Head Start Program? A. A teaching method which equips students to regurgitate facts in order to do well on standardi
never [62]

Answer: A federal program that provides academically focused preschool to students of low socioeconomic status.

       

Explanation: Head Start is a U.S. Department of Health and Human Services program that offers extensive early childhood development, healthcare, nutrition, and permissive parenting services to children and families with low incomes.

The services and programs are intended to promote stable and loving relationships, strengthen the emotional and financial well-being of children, and create an atmosphere for the development of good cognitive abilities.                  

7 0
3 years ago
Other questions:
  • Shanon will pay for an annual gym membership that costs $420.00. She has 152.62 in her checking account. What are the pros and c
    8·1 answer
  • The simplest and most effective way to lay out your business structure is to include
    12·1 answer
  • Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which of the following b
    6·1 answer
  • Dunwich is a small village; in 2014, its GDP was $10,000 and its population was 10 people. In 2015, GDP in Dunwich decreased to
    7·1 answer
  • Receivables might be sold to
    10·1 answer
  • A customer value proposition is developed through an effective marketing mix that communicate about what to the customer?
    14·1 answer
  • Amos, Inc. uses a standard cost system with the following labor standards for one unit of product: standard hours 0.2 and standa
    13·1 answer
  • They are chasing a dog convert into passive voice​
    13·1 answer
  • What osi layer encrypts data sent from network​
    13·1 answer
  • Journalize the entries to correct the following errors:
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!