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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

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3 years ago
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<em>brainly.com/question/14524755</em>

6 0
2 years ago
Brainliest + Points! Please explain
svetoff [14.1K]

B.

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3 0
3 years ago
Dunstreet's department store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out.
ArbitrLikvidat [17]

Answer:

219 sheets

Explanation:

D = 5000 per year,

d = daily demand = 5000/365 = 13.70 sheets

T = time between orders (review) = 14 days

L = Lead time = 10 days

σd= Standard deviation of daily demand = 5 per day

I = Current Inventory = 150 sheets Service Level

P = 95% (Probability of not stocking out) q=d(L+D)z σ T+L-1

σ T+L-1= square root (T+L)=5 square root 14+10= 24.495

From Standard normal distribution, z = 1.64 for 95% Service Level (or 5% Stock out)

q=13.70*(14+10)+1.64(24.495)-150

= 218.97 →219 sheets

5 0
3 years ago
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