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Sladkaya [172]
2 years ago
10

There is a bond that has a quoted price of 110.547 and a par value of $2,000. The coupon rate is 7.05 percent and the bond matur

es in 19 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?
Business
1 answer:
olga55 [171]2 years ago
6 0

Answer:

the YTM of the bond is 127.55 %

Explanation:

The YTM of the bond is the Market return that similar Bond Holders expect from the bond.

This can be calculated using a Financial calculator as :

PV = - $ 110.547

FV =  $2,000

PMT =  $2,000 x 7.05 % x 1/2 = $70.50

N = 19 x 2 = 38

P/yr = 2

YTM = ???

Therefore, the YTM of the bond is 127.55 %

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Straight-Line Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019. The truck is expec
Ket [755]

Answer:

Annual depreciation= $7,996

Explanation:

Giving the following information:

Purchase price= $42,000

Useful life= 5 years

Salvage value= $2,020

<u>To calculate the annual depreciation under the straight-line method, we need to use the following formula:</u>

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (42,000 - 2,020) / 5

Annual depreciation= $7,996

5 0
3 years ago
Assume that investors can borrow and lend at risk-free rate of 5%. The optimal tangent portfolio on the efficient frontier has a
gizmo_the_mogwai [7]

Answer:

B. Portfolio B with E(R)=13% and STD=18%

Explanation:

The computation is shown below;

Reward to risk ratio = (15% - 5%) ÷ 20% = 0.5

The porfolio should be in line i.e.

= 0.05 + 0.5 × standard deviation

For portfolio A

= 0.05 + 0.5 × 25

= 17.5%

For portfolio C

= 0.05 + 0.5 × 1

= 5.5%

Portfolio B, the std is 18%

So,

= 0.05 + 0.5 × 18%

= 14%

5 0
2 years ago
A $1000 par value bond with 5 years to maturity and a 6% coupon has a yield to maturity of 8%. Interest is paid semiannually. Ca
Katarina [22]

Answer:

$918.89

Explanation:

For computing the current price of the bond we need to apply the present value formula i.e to be shown in the attachment

Given that,  

Future value = $1,000

Rate of interest = 8%  ÷ 2 = 4%

NPER = 5 years × 2 = 10 years

PMT = $1,000 × 6% ÷ 2 = $30

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formula, the current price of the bond is $918.89

7 0
3 years ago
During 2021, Farewell Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. Th
grigory [225]

Answer:

a) c. $4.34

b) b. $4.10

Explanation:

a) Find Farewell's diluted earnings per share for 2021.

Use the formula below:

Diluted EPS = (Net income after tax - preferred dividend) / diluted common stock

= \frac{2,500,000 - (50,000*100*0.06)}{500,000+(200,000 - ((29*10,000)/30))}

= \frac{2,500,000 - 300,000}{500,000 + (200,000 - 193,333)}

= \frac{220,000}{506,667}

= 4.34

Diluted EPS = $4.34 per share

b) stock options = 5,000

Value in current shares = 500,000/12 = $4,167

Diluted shares = 5000 - 4167 = 833

Use the formula below to find the diluted earnings per share:

Diluted EPS = Net income/share outstanding

= \frac{269,915}{50,000 +(20,000-5,000) + 833)}

= \frac{269,915}{50,000 + 15,000 + 833}

= \frac{269,915}{65,833}

= 4.10

Diluted EPS = $4.10 per share

8 0
3 years ago
The main reason there are fewer production industries than distribution or service industries is that a. there are few things pr
Assoli18 [71]

Answer:

c. production industries need a large initial investment.

Explanation:

The main reason there are fewer production industries than distribution or service industries is that production industries need a large initial investment. Production companies such as energy companies can be partitioned into gas, oil as well as coal generators, the corporations that explore, regain and clarify energy sources as well as power companies that produce effectiveness to corporations as well as individuals. Both sectors of the energy enterprise perform frequently substantial money investments. Similarly power companies, telecommunications companies need continuous investments in support in enhancement to analysis and advancement as well as product manufacturing.

8 0
2 years ago
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