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
White raven [17]
3 years ago
5

You are given the following information with respect to a bond: par value: 1000 term to maturity: 3 years annual coupon rate 6%

payable annually You are also given that the one, two, and three year annual spot interest rates are 7%, 8%, and 9% respectively. The bond is sold at a price equal to its value. Calculate the annual effective yield rate for the bond i.
Business
1 answer:
Minchanka [31]3 years ago
5 0

Answer:

Tha annual effective yield rate for the bond is:

= 6.2%

Explanation:

a) Data and Calculations:

Bond par value = $1,000

Annual coupon rate = 6%

Annual spot interest rates = 7%, 8%, and 9% for year 1, year 2, and year 3 respectively

Current value of bond = $970 ($1,000 * 99% * 99% * 99%)

Annual coupon payments = $60 * 3 = $180

Effective rate for the three years = $180/$970 * 100 = 18.6%

Annualized effective yield rate = 6.2% (18.6%/3)

OR

Annualized effective yield rate = (Annual coupon payments/Current value of bonds)

= 6.2% ($60/$970)

You might be interested in
Read the following business-writing scenario. Then use what Chapter 5 says about choosing appropriate words to answer the questi
Andreas93 [3]

Answer:

Our treatment covers whole nine yards - from the common cold to strep throat to whooping cough.

Thank you for your recent donations to support Metropolitan Health Center.

Explanation:

The donors should be given a nice thank you for the support they have made to the Metropolitan Health Center. The donors have donated and supported the center during this fundraising campaign. The donors must feel appreciated as they have supported the center. The letter should start from a big Thank you to all the donors.

3 0
3 years ago
At the end of January, Mineral Labs had an inventory of 895 units, which cost $12 per unit to produce. During February the compa
FromTheMoon [43]

Answer:

$30,600

Explanation:

Under the LIFO Method, the cost of good sold equals to

= February units × cost per unit + Remaining units × cost per unit

= 1,500 units × $16 + 550 units × $12

= $24,000 + $6,600

= $30,600

Since the firm has sold 2,050 units, so out of which 1,500 units sold at a price of $16 and the remaining 550 units sold at a price of $12

3 0
3 years ago
What is litagation mediation and arbitration
sveticcg [70]

Answer:

Litigation is the process of taking legal action.

Mediation is intervention in a dispute in order to resolve it.

Arbitration is the use of an arbitrator to settle a dispute.

7 0
4 years ago
Read 2 more answers
Using a neoclassical model, what will the level of cyclical unemployment be when an economy is producing at potential GDP?
MakcuM [25]

Answer:

<em>Zero</em>

Explanation:

There are three(3) types of unemployment recognized by economists;

<em>Structural unemployment:</em> This occurs where innovation and technological improvement render workers unemployable because their is a mismatch between the available jobs and the skills possessed by willing workers. For example, the introduction of online classes might  reduce the number of teachers needed by a school.

<em>Frictional unemployment:</em> This is used to describe the number of people looking for jobs because they are transiting from one job to another.The addition of the structural and frictional is know as the <em>natural rate of of unemployment.</em>

<em>Cyclical unemployment</em><em>:</em><em> </em>this is caused by fluctuation in real GDP around the potentila GDP. For example, when the real GDP falls significantly for a sustained period of six month. At a time like this, the economy is contracting and it is evident by a negative growth rate in real output, firms do lay off workers because the business climate is not favorable.This is called <em>recession</em>. The cyclical unemployment is the difference between the actual rate of unemployment and natural rate. During recession, the actual is always greater thant the natural; and the balance is cyclical unemployement

<em>Full employment output and cyclical unemployment</em>

The potential GDP is the level of real GDP achieved where an economy has fully employed all of its resources ( land, labour, capital and entrepreneur). It is also called <em>full employment GDP</em>. An economy operating at its potential GDP level will still record some level of unemployment which is known as natural unemployment. And its actual rate of unemployment will be equal to the natural rate.

<em>In other words, at the full employment output  level, the actual rate of unemployment is the same the natural rate of unemployement. So there is zero cyclical unemployment rate</em>

8 0
3 years ago
Amazing Industries began 2018 with accounts​ receivable, inventory, and prepaid expenses totaling $ 48 comma 000 and its total c
seropon [69]

Answer:

Net Cash flow from operating $55,000

Explanation:

<em>To determine the net cash flow from operating activities. We will adjust the net income as follows; all decrease in assets and increase in liabilities are added and all increase in assets and decrease in liabilities are subtracted.</em>

                                Amazing Industries  2018

Cash flow from operating activities

                                                      $

Net Income                                48,000

<em>Adjustments:</em>

less gain on sale of land                (4,000)

Add depreciation expense       7.000

increase in current asset           (1,000)           i,e  <em>(49,000 -48,000)</em>

Increase in current liabilities       <u>5000</u>         i.e  <em>(42,000 -37,000)</em>

Net Cash flow from operating      <u>55,000</u>

All decrease in assets and increase in liabilities are added. All increase in assets and decrease in liabilities are subtracte<u>d.</u>

8 0
4 years ago
Other questions:
  • 2. If a series of severe storms in the Atlantic Ocean drastically significantly disrupted the transatlantic slave trade, which w
    14·1 answer
  • A new accountant at Marin Inc. is trying to identify which of the amounts shown below should be reported as the current asset "C
    10·1 answer
  • The actual behavior of the person who occupies a status is termed Select one: a. role performance. b. master status. c. role set
    12·1 answer
  • During the ___________ stage of the product life cycle, firms either position themselves for a niche segment of diehard consumer
    9·1 answer
  • What is product differentiation?
    12·1 answer
  • Each of two stocks, A and B, is expected to pay a dividend of $7 in the upcoming year. The expected growth rate of dividends is
    6·1 answer
  • Ingrid wants to acquire a lot of exposure for a new product line that she's launching. She understands that she can reach a sign
    8·1 answer
  • 4. In providing more interesting work for employees through the conducto
    10·1 answer
  • FCIA deduction consists of
    13·1 answer
  • Student dorms, nursing homes, and on-campus fraternity houses are considered...? Public housing Temporary housing Mixed-use hous
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!