g These bonds would sell at a discount when the: Multiple Choice bond stated interest rate is above the market rate of interest.
1 answer:
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Answer:
8.99%
Explanation:
For this question we use the PMT function that is presented on the excel spreadsheet. Kindly find it below:
Given that,
Present value = $975
Future value = $1,000
Rate of interest = 9.25% ÷ 2 = 4.625%
NPER = 25 years × 2 = 50 years
The formula is shown below:
= PMT(Rate,NPER,-PV,FV,type)
The present value come in negative
So, after solving this, the PMT is $44.96
Now the annual PMT is
= $44.96 × 2
= $89.92
So, the coupon interest rate is
= $89.92 ÷ $1,000
= 8.99%
Answer:
i=4.84%
Explanation:
the key to answer this question, is to remember the model of return for a perpeuity dividend calculation:
where value is the current stock price, i is the dividend yield and k is the growth rate, so applying to this particular case we have
k=3.4/91
k=3.74%
and solving i for the previous formula: