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Ilya [14]
3 years ago
6

A bond with a $1,000 face value and a 10 percent annual coupon rate matures in 15 years. a. Determine the value of the bond to a

friend of yours with a required rate of return of 13%. b. A zero coupon bond with similar risk is selling for $180. The bond has a face value of $1,000 and matures in 15 years. Your friend asks you which bond she should invest in
Business
1 answer:
Licemer1 [7]3 years ago
8 0

Based on the details given, the following are true:

  • a. Value of bond = $806.09
  • b. Your friend should invest in the bond with $1,000 face value

<h3>Value of Bonds </h3>

First find coupon:

= 10% x 1,000

= $100

Bond A

<em>= (Coupon x Present value interest factor of annuity, 13%, 15 years) + Face value of bond / ( 1 + 13%)¹⁵</em>

= ( 100 x 6.462) + (1,000 / 1.13¹⁵)

= $806.09

Bond B

= Face value - Current value

= 1,000 - 180

= $820

In conclusion, Bond B is overvalued so your friend should pick Bond A.

Find out more on Bond price calculation at brainly.com/question/25365327.

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A decrease in the supply of a good can be expected to cause ____ in the equilibrium price of the good and ____ in the equilibriu
JulsSmile [24]

Answer:

Increase, Decrease

Explanation:

A decrease in the supply results in many buyers competing for very few goods. If the demand is constant, the quantity supplied and price have an indirect relationship. A decrease in the volume of supplied results in an increase in price. Many buyers will be competing for a few products causing the equilibrium price to increase.

A decrease in supply will cause the quantity available for buyers to buy to decline. Consequently, the volume purchased will be fewer.  Equilibrium quantity will, therefore, decrease.

4 0
3 years ago
1. Which of the following events would make it more likely that a company would call its outstanding callable bonds? a. The comp
muminat

Answer:

The answer is letter C

Explanation:

Market interest rates decline sharply.

6 0
3 years ago
Turn to Part C of the Systems Analyst’s Toolkit and review the concept of net present value (NPV). Determine the NPV for the fol
Tcecarenko [31]

Answer:

$-13,975.91

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Cash flow in year 0 =  $-95,000

Cash flow in year 1 =  $30,000

Cash flow each year from 2 to 5 =  $20,000

I = 12%

NPV = $-13,975.91

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

5 0
3 years ago
9. How is planning made any why is it important ? Explain .<br><br>​
Varvara68 [4.7K]
Planning is made through a psychological process of rendered thoughts and ideas. Planning is important because for starters, it is a good way of gathering things in one’s mind and having mental organization. It is better to have things planned out than procrastinated because then, stress levels rise, efficiency is slower, and the accuracy of things that go on significantly depletes. Without planning, most of us would not survive because we would be so caught up in what is happening in the moment and how that affects us that we would not be able to process an idea or, as we’re referring to here, a plan. If you need any help, let me know and I will gladly assist you.
5 0
2 years ago
The operations vice president is adjusting the production quantities for the upcoming month of March for the coal company. Last
12345 [234]

Answer:

The correct answer is letter "B": Increase output and hire more workers.

Explanation:

According to the supply law, if the price increases so will the quantity supplied and if the price decreases the same will happen with the quantity supplied. We could say that the relationship between price and quantity supplied is directly proportional.

In the example, <em>as the price of coal increased so will the quantity supplied</em>. <em>If there is to be more supply the output should be higher which is likely to be interpreted in a need for more employees</em>.

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4 years ago
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