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
notka56 [123]
3 years ago
15

Consider the case of Demed Inc.: Demed Inc. has 9% annual coupon bonds that are callable and have 18 years left until maturity.

The bonds have a par value of $1,000, and their current market price is $1,130.35. However, Demed Inc. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on Demed Inc.’s bonds? Value YTM YTC If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Demed Inc.’s bonds? 18 years 13 years 5 years 8 years If Demed Inc. issued new bonds today, what coupon rate must the bonds have to be issued at par?
Business
1 answer:
solong [7]3 years ago
6 0

Answer:

A) YTM = 7.64%

B) YTC = 7.36%

C) 8 years

D )   7.64%

Explanation:

Annual coupon bond rate = 9%

number of year left until maturity = 18

par value of Bonds( FV ) = $1000

current market price( PV ) = $1130.35

Demed can call bonds in 8 years at a call price of $1060

A) what is the Bonds' YTM  ( yield to maturity )

we calculate the interest per period ( PMT )

= ( Fv * Annual coupon bond rate) / number of compounding per year

= (1000 * 9% ) / 1 = $90

next we calculate number of compounding periods till maturity ( NPER )

= number of years to maturity * number of compounding per year

= 18 * 1 =  18

using excel formula = RATE ( NPER,PMT,PV,FV) )

hence yield to maturity = 7.64%

B) what is YTC ( yield to call )

we calculate the interest per period ( PMT )

= $1000 * ( coupon rate / number of compounding per year )

= $1000 * ( 9% / 1 )  = $90

 next we calculate the number of compounding periods till sell

= 8 * 1 = 8

using excel formula = RATE ( NPER,PMT,PV,FV) )

Hence the YTC = 7.36%

C) Bonds will be called at 8 years and this is because the YTC is less than YTM

D )   The coupon rate for the bonds to be issued  at par,  is  7.64%

You might be interested in
The Waltham System
erastovalidia [21]

Answer:

Option A                

Explanation:

The Waltham-Lowell method was a labor and manufacturing paradigm implemented in the U.s during the growth of the textile industry, especially in New England, in the broader context of the initial 19th century rapid growth of the Industrialisation.

The program utilized regional labor, sometimes linked to as mill girls, who went from small towns to the fresh textile facilities to make more money than they might at home to live an educated life in "the town." Their lives were very structured-they lived in boarding houses for the corporation and were carried to stringent hours and a value system.

8 0
3 years ago
Which is the simplest way to setup a business?
charle [14.2K]
It would either be A
3 0
2 years ago
How often should a system demo occur?
Elden [556K]

A system demo should occur After every iteration .

<h3>When should a system demo occur?</h3>

A system demo shows the new features that the system has, as a result of the iteration that it was just put through. This is very helpful in knowing the features that you can use to make the system perform in such a way that your work will be done well.

It is therefore best that a system demo is done after every iteration has been done. This ensures that the system's features will be seen and used effectively.

Find out more on system demo at brainly.com/question/14264947

#SPJ1

6 0
11 months ago
When a dividend is not declared on preferred stock, and the common share­holders cannot receive a dividend until all past and cu
Lady_Fox [76]

Answer:

cumulative.

Explanation:

Cumulative preferred stock is defined as a type of stock that states that if any dividend payments have been missed the first payment of the owed dividends must be done to cumulative preferred shareholders in first instance

4 0
3 years ago
Diane owns a bakery where she sells cupcakes. Two blocks down there is another bakery, CC's Bakery, that sells cupcakes for $1 l
BabaBlast [244]

Answer:

competition based pricing

Explanation:

When a company engages in a competition based pricing strategy, they will set the price of their products or services taking based on the price of their main or direct competitor. The product or service provided by the competitor is used to benchmark both the price and quality of the goods and services offered by the company.

For example, Coca Cola products are used as a price reference for all the soda products sold by other companies.

8 0
3 years ago
Other questions:
  • Prince Company acquires Duchess, Inc. on January 1, 2016. At the date of acquisition, Duchess has long-term debt with a fair val
    9·1 answer
  • Which company is more likely to have the higher inventory turnover ratio: a grocery store or an automobile manufacture?
    10·1 answer
  • By what percentage did​ mydeco's revenues grow each year from 2010 to​ 2013?b. by what percentage did net income grow each​ year
    13·1 answer
  • Cost of goods available for sale is computed by adding: a) purchases to beginning inventory.b) beginning inventory to the cost o
    11·1 answer
  • ABC Retail stocks and sells its own brand of personal computers. It costs the firm $600 each time it places an order with a manu
    9·1 answer
  • How does risk management change when an organization ‘goes global?’
    14·1 answer
  • Benjamin Franklin said, “Beware of little expenses. A small leak will sink a great ship. ” What does this mean to a person tryin
    15·1 answer
  • Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent y
    11·1 answer
  • Juno Co. purchased a machine for $10,000 and estimates it will use the machine for three years with a $2,000 salvage value. It e
    11·1 answer
  • How do you manage a business?:​
    12·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!