B

Consider three bonds with 6.8% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The sh

makvit [3.9K]

Answer:

a. What will be the price of each bond if their yields increase to 7.8%?

4 Years : $966,73 (see example)

8 Years : $942,09

30 Years : $885,26

b. What will be the price of each bond if their yields decrease to 5.8%?

4 Years : $1,034.81 (see example)

8 Years : $1,062.59

30 Years : $1,140.64

Explanation:

Principal Present Value = F / (1 + r)^t

Coupon Present Value = C x [1 - 1/(1 +r)^t] / r

This is an example for 4 years, 7,8%, to the others years only change "t".

The price of this bond it's $740,50 + $226,23 = $966,73

Present Value of Bonds $740,50 = $1,000/(1+0,0780)^4

Present Value of Coupons $226,23 = $68 (Coupon) x 3,33

3,33 = [1 - 1/(1+0,0780)^4 ]/ 0,0780

This is an example for 4 years, 5,8%, to the others years only change "t".

The price of this bond it's $798,10 + $236,71 = $1,034.81

Present Value of Bonds $798,10 = $1,000/(1+0,0580)^4

Present Value of Coupons $236,71 = $68 (Coupon) x 3,48

3,48 = [1 - 1/(1+0,0580)^4 ]/ 0,0580

6 0

3 years ago

5) A car rental company offers two plans for one way rentals. Plan I charges $36 per day and 17 cents per mile. Plan II charges

Rom4ik [11]

Answer:

a. Plan I is better is we drive 300 miles in a day.

b. 150 miles.

Explanation:

a. if mileage is 300 then rental charges will be,

Plan I : $36 + 17 cents * miles

$36 + 0.17 * 300 = $41.10.

Plan II : $24 + 25 cents * miles

$24 + 0.25 * 300 = $99.00

Plan I total cost for 300 miles is $41.10 whereas Plan II total cost for 300 miles is $99.00. Plan I is better plan and cost effective.

b. For mileage (m) calculation we will use equation;

Plan I = Plan II

$36 + 0.17m = $24 +0.25m

0.25m - 0.17m = $36 - $24

m = $12 / 0.08

m = 150 miles.

6 0

3 years ago

When you know a firearm's effective killing range, you can determine: which animals you can hunt which stance to use when shooti

MrMuchimi

The answer that best fits the question is that 'when a shot will give a clean kill' because a firearm's killing range can be known or considered to be more effective if it has the capacity of providing a clean kill with only using a one shot and does not require for a second or more.

7 0

3 years ago

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess d

Black_prince [1.1K]

Answer:

C. Nonprice methods of rationing emerge.

Explanation:

Since the landlords can only rent the apartments on the regulated price, no matter how high the demand nor how low the supply, it is inevitable that certain rationing model would appear, that is not based on the cost of the apartment.

Perhaps the landlords would prioritize families to move in to their apartment, or maybe the landlords would prioritize individuals who are not from out-of-state. It is also possible to prioritize by other aspects, such as gender or race.

8 0

3 years ago

The financial plan part of a business plan should show how you plan to fund the business at various stages of the company's?

Deffense [45]

A financial plan is nothing more than a summary of your company's present financial situation and growth expectations. Consider any records that show your current financial status as a snapshot of the state of your company, and the projections as your hopes for the future. The financial plan is a snapshot of your company's current status,

As was previously stated. Your short- and long-term financial goals are informed by the predictions, which can serve as a springboard for establishing a plan of action. It aids you in establishing reasonable goals for the achievement of your company as a business owner.

Simply said, if you are well-versed in your finances, you are less likely to be taken aback by your current financial situation and better equipped to handle a crisis or rapid growth.

To learn more about financial plan, click here

brainly.com/question/28102477

#SPJ4

7 0

2 years ago