A dual-currency bond is known to be a hybrid debt instrument that often has payment obligations over the life of the issue. A dual currency bond is a straight fixed-rate bond issued in one currency that pays coupon interest in that same currency.
- In dual currency bond, the borrower often makes coupon payments in one currency, but get the principal at maturity in another currency.
Its advantage is that Investors using this bonds often gets higher coupon payments than straight bonds etc.
Straight fixed-rate bond issues often have a Known maturity date where the principal of the bond issue is said to be repaid.
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Answer:
Instructions are listed below
Explanation:
Giving the following information:
At the end of each year, she invests the accumulated savings ($1,825) in a brokerage account with an expected annual return of 8%. She will invest for 45 years.
A) We need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {1825[(1.08^45)-1]}/0.08= $705,372.75
B) n= 25
FV= {1825[(1.08^25)-1]}/0.08= $133,418.34
C) FV= 705,372.75 A=?
We need to isolate A:
A= (FV*i)/{[(1+i)^n]-1}
A=(705,372.75*0.08)/[(1.08^25)-1]
A= $9,648.64
Answer: The following statements is true: <u><em>The amount of unamortized discount decreases from its balance at issuance date to a zero balance at maturity.</em></u>
Unamortized discount amount is decreased from balance at provision to a nil balance at due date. This is so , as it will be liquidated over entire bond’s life and thus will reach $ 0 maturity.
<u><em>Therefore, the correct option is (c).</em></u>
