A 20-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices.

a. What is the bond’s yield to maturity if the bond is selling for $970?
b. What is the bond’s yield to maturity if the bond is selling for $1,000?
c. What is the bond’s yield to maturity if the bond is selling for $1,170?

Answers

Answer 1

Answer:

since you are required to calculate the effective yield to maturity, you cannot use the approximate YTM formula since it is not exact. You will need to use a financial calculator, online calculator or excel spreadsheet. I prefer to use an excel spreadsheet and use the IRR function:

a) initial outlay = -$970

cash flows 1 - 19 = $80

cash flow 20 = $1,080

IRR = 8.31%

Since the bond is sold at a discount, the effective yield will be higher than the coupon rate.

b) if hte bond is sodl at par, the effective yield to maturity is the coupon rate = 8%

c) initial outlay = -$1,170

cash flows 1 - 19 = $80

cash flow 20 = $1,080

IRR = 6.49%

Since the bond is sold at a premium, the effective yield will be lower than the coupon rate.


Related Questions

Which of the following statements regarding the differences between management and leadership is not true

Answers

Incomplete question. The options read;

a. A manager always has the ability to influence others; a leader may not.

b. A manager has a formal title and authority.

c. A leader may either be a manager or a nonmanager.

d. All managers perform four major functions: planning, organizing, leading, and controlling.

Answer:

c. A leader may either be a manager or a nonmanager.

Explanation:

it is not true that a leader may be either be a manager or a nonmanager as the very essence of leading involves managing/motivating others into action.

Hence, a leader should have the ability to manage people, although having the ability to manage does not mean that a leader would always have the ability to influence others, because others may easily refuse to be influenced by a leader than when dealing with a manager.

A positive externality a. results in an optimal level of output. b. is a benefit to the producer of the good. c. is a benefit to someone other than the producer and consumer of the good. d. is a benefit to the consumer of the good.

Answers

Answer:

c. is a benefit to someone other than the producer and consumer of the good.

Explanation:

In the production process an externality is the effect of the activities not the business on the society. This can be positive or negative.

A positive externality is one in which the consumption not a produced good results in benefit to a third party other than the producer or consumer.

For example if car buyers decide to walk more often than drive it will reduce pollution in the society. This is a positive benefit to the society at large.

Or when an apple farmer plants his trees it provides nectar to the beekeeper.

Item2 10 points Item 2Item 2 10 points On January 1, 2020, Mirada, Inc. issued five year bonds with a face value of $100,000 and an annual stated rate of 8%. Interest payments are made annually on December 31st. The bonds were issued for $108,425, when the market rate of interest was 6%. How much interest expense would Mirada record for 2020

Answers

Answer:

Mirada, Inc.

The interest expense that Mirada would record for 2020 is:

$6,315 ($8,000 - $1,685).

Explanation:

a) Data and Calculations:

Face value of bonds = $100,000

Annual interest rate = 8%

Annual interest expense = $8,000 ($100,000 * 8%)

Issued value of the bonds = $108,425

The bonds were issued at a premium of $8,425

Premium Amortization over five years on a straight-line basis = $1,685 ($8,425/5).

This implies that the interest expense will be reduced by $1,685 per annum.

Answer:

15

Explanation:

When your bank or credit card company sends you a notification of changes in how it collects or shares data, it is sending that notification in compliance with ________________.A. Disclosures in interest rule.
B. FERPA.
C. Sox.
D. Financial Privacy Rule.

Answers

Answer:

D)Financial Privacy Rule

Explanation:

Financial Privacy Rule, help in governing the way the collection as well as disclosure of customer financial information, it enforce that customer information must be protected by all financial institutions . It should be noted that When your bank or credit card company sends you a notification of changes in how it collects or shares data, it is sending that notification in compliance with

Financial Privacy Rule Disclosures in interest rule.

Suppose a State of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.4%, how much is the bond worth today?

a. $651.60
b. $684.18
c. $718.39
d. $754.31
e. $792.02

Answers

Answer: $651.60

Explanation:

From the question, we are informed that a State of California bond will pay $1,000 eight years from now and that the going interest rate on these 8-year bonds is 5.4%.

The worth of the bond today will then be:

FV = $1000

N = 8

I/Y = 5.4% = 0.054

We would use the formula:

= FV / (1+r)^(-N)

= $1000 / (1+0.054)^8

= $651.60

Joe Carie, head accountant, is using the indirect method and the account balance from the balance sheet and income statement to prepare a statement of cash flows. A decrease in the balance of the Accounts Receivable account would:___________ a) decrease cash flow from operating activities. b) decrease cash flow from financing activities. c) increase cash flow from operating activities. d) increase cash flow from investing activities.

Answers

Answer: c) increase cash flow from operating activities.

Explanation:

If there is a decrease in the Accounts Receivable, this means that some receivables have settled their debt to the company which means that the company got cash. Cashflow therefore increases.

Accounts receivables relate to Sales which is part of the operations of the business so this is an increase in cashflow from operating activities.

Which of the following is a term for intangible things such as providing delivery
that are sold by retailers? *
A gifts
B training
C services
D products

Answers

Answer:

c

Explanation:

services are something intangible that you sell

Suppose that a country's inflation rate increases sharply. Which of the following statements are true?

a. Wealth in savings accounts is not subject to a change in the inflation tax because the real interest rate will increase with the rise in inflation.
b. The inflation tax on holders of money increases.
c. Holders of savings accounts are hurt by the increase in the inflation rate because they are taxed on their nominal interest income.

Answers

I think the answer is A

Suppose you want to save in order to purchase a new boat. Take the APR to be 4.8%. You want to have $13,000 toward the purchase of a boat in three years. How much do you need to deposit each month

Answers

Answer:

Monthly deposit= $336.46

Explanation:

Giving the following information:

Future Value (FV)= $13,000

Number of periods= 12*3= 36 months

Interest rate= 0.048/12= 0.004

To calculate the monthly deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (13,000*0.004) / [(1.004^36) - 1]

A= $336.46

10. Do you think engaging in organic farming is an example of corporate citizenship? Why?

Answers

Answer:

The global population is growing rapidly causing a rise in demand for sustainable food production.

Explanation:

Ahngram Corp. has 1,000 defective units of a product that cost $3.30 per unit in direct costs and $6.80 per unit in indirect cost when produced last year. The units can be sold as scrap for $4.30 per unit or reworked at an additional cost of $2.80 and sold at full price of $12.90. The incremental net income (loss) from the choice of reworking the units would be:________

a. $2,800.
b. $4,300.
c. $10,100.
d. ($2,800).
e. $0.

Answers

Answer:

If the units are reworked, income will increase by $5,800.

Explanation:

Giving the following information:

Number of units= 1,000

Sell as-is= $4.3

Rework cost= $2.8

Selling price= $12.9

Because the original cost will remain constant in both options, we will not take them into account.

Sell as-is:

Effect on income= 1,000*4.3= $4,300

Rework:

Effect on income= 1,000*(12.9 - 2.8)

Effect on income= $10,100

If the units are reworked, income will increase by $5,800.

Company BW has issued 2,000 preferred stocks. The par value is $100, dividend rate is 8%, and dividend is paid at the end of each year. Market price is $85 a share. Find the annual cost of preferred stock.

Answers

Answer:

9.411 %

Explanation:

COst of preferred stock can be calculated by dividing the dividend by the market price per share

DATA

Dividend rate = 8%

Par value = $100

Dividend = 8% x $100 = $8

Market price = $85

Solution

Cost of Preferred stock = Dividend / Market price

Cost of Preferred stock= 8% ×$100/$85

Cost of Preferred stock= 9.411 %

Danaher's capability of implementing the DBS in its acquired firms is one of its core competencies True False

Answers

Answer:

True

Explanation:

Danaher top executives have been actually very good at carrying out mergers and acquisitions, including the acquisition of high tech firms after year 2000. Danaher is a very lean corporation in the sense that it sales levels are very high compared to the number of corporate executives and the number of reporting units. Even the DBS Office was small compared to how important it is.  Danaher has been able to use DBS successfully and constantly improving through feedback.

Windsor Corporation has the following balances at December 31, 2017.Projected benefit obligation $2,561,000Plan assets at fair value 1,977,000Accumulated OCI (PSC) 1,095,000What is the amount for pension liability that should be reported on Windsor's balance sheet at December 31, 2017?Pension liability balance at December 31, 2017 $

Answers

Answer:

$584,000

Explanation:

Calculation for the amount of pension liability that should be reported

Projected benefit obligation $2,561,000

Less Plan assets at fair value 1,977,000

Pension liability $584,000

Therefore the Pension liability balance at December 31, 2017 will be $584,000

On December 1, Victoria Company signed a 90-day, 8% note payable, with a face value of $16,200. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Answers

Answer: Interest expense=$108

Explanation:

Interest expense =Principal x Rate x Time ( Period)

Where

Principal = $16,200

Rate =, 8%

TIme ( Period ) =  From December 1st to 31`st = 30 days

Interest expense= P x R x T

= $16,200 X 0.08 X 30/360

=$108

The amount of interest expense accrued at December 31 on the note is $108

The amount of interest expense that is accrued at December 31 on the note $108.

Using this formula

Accrued interest expense=Note payable × Interest rate × Time period

Where:

Note payable=$16,200

Interest rate =8%

Time period=30/360

Let plug in the formula

Accrued interest expense= $16,200 × 8% × (30 ÷ 360)

Accrued interest expense= $108

Inconclusion the amount of interest expense that is accrued at December 31 on the note $108.

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A loan commitment of $4.43 million with an up-front fee of 60 basis points and a back-end fee of 35 basis points. The take-down on the loan is 40 percent. Calculate the total fees you will pay on this loan commitment.

Answers

Answer:

Total fees paid = $2,700,085

Explanation:

Given:

Loan Amount = $4,430,000

Up-Front basis fee = 60 points

Back-end fee = 35 points

Take down = 40 %

Computation:

Up-Front basis fee = $4,430,000 x 0.0060

Up-Front basis fee = $26,580

Back-end fee = $4,430,000 x 0.0035

Back-end fee = $15,505

Take down amount = $4,430,000 x 40%

Take down amount = $1,772,000

So

Total fees paid = [$4,430,000 - $1,772,000] + $26,580  + $15,505

Total fees paid = $2,700,085

Graduating from college two years ago, Marshall lives a solidly middle-income lifestyle. He’s paying his student loans, his rent, and all of his other expenses on-time. He has 6 credit cards open already, each of which he signed up for because of introductory perks like 0% interest for the first year, free airline miles, and 20% off his first month’s purchases at his favorite store. He pays his full balance each month and stops using the card once the initial features expire. He wants to open a 7th card that’s offering free one-way flights to the Caribbean; he has enough money saved to pay for the return flight and other aspects of the vacation.

Answers

The correct answer to this open question is the following.

You forgot to include the question. Here we just have a statement, but no question at all.

Maybe you wanted to add an opinion or you need to say if this individual needs an extra credit card.

If that is the case, then we can comment on the following.

No. Marshall doesn't need an extra credit card. He already has six, another one could be a burden to his financial record.

Marshall is doing well. He lives a solidly middle-income lifestyle. He’s paying his student loans, his rent, and all of his other expenses on-time. There is no reason to incur more debt with another credit card.

Plus the fact that the other six cards pay 0% interest for the first year, free airline miles, and 20% off his first month’s purchases at his favorite store. But all of that is going to change after the first year and interests are coming.

Until today, he has been strict in paying his full balance each month and he is responsible enough to stop using the card once the initial features expire. Although he desires to take a vacation using the advantages of another credit card, he has to be disciplined and refrain to get it. Six cards are too many for the way of life and the job he has. The moment he loses control of the use of the credits and gets into debt, plus interests, problems are going to raise.

Firms are more likely to accept a special order for one of their products at a reduced price if: ________

a. Excess capacity exists
b. The order is small
c. The buyer plans to compete in the markets of the firm's regular customers
d. All costs are variable

Answers

Answer:

a. Excess capacity exists

Explanation:

The law of supply states that, all things being equal (ceteris paribus), an increase in the price of product or service causes an increase in the quantity of the product that will be supplied. An increase in price causes the supply curve to slope upward, therefore, giving producers of goods and service providers, an incentive to supply more quantity of their products and vice-versa.

Also, the demand for goods and services has an effect on the quantity of goods and services provided by the producers or suppliers, all things being equal. Hence, an increase in the demand for a product would result in an increase in price, thereby causing the producers to supply more quantity in order to maximize profits.

For instance, an electronic gadget company will manufacture more television sets if the price of those television increase.

Hence, firms are more likely to accept a special order for one of their products at a reduced price if excess capacity exists.

This ultimately implies that, when a company has more goods in its inventory or its stocks are in excess, the company will be willing to accept special orders from its customers.

If the spending power of NAFTA consumers increased to $7.5 trillion and the NAFTA share changed to 17.5% of all combined spending power of NAFTA and the European Union, what is the increased spending power of the EU? Round to the nearest tenth of a trillion dollars

Answers

Answer: $35.3 trillion

Explanation:

NAFTA Spending power = $7.5 trillion

The spending power of the European Union will be denoted by E while the combined spending power will be denoted by E + N.

N = 17.5% of (E + N)

N = 17.5 / 100 (E + N)

100N = 17.5E + 17.5N

100N - 17.5N = 17 5E

82.5N = 17.5E

E = 4.7N

E = 4.7(7.5)

E = $35.3 trillion

If the government regulates a natural monopolist to produce the allocatively efficient level of output, it will require the monopolist to set a price that is:

a. equal to its marginal cost and grant a subsidy to cover the loss

b. equal to its average total cost and levy a tax on the excess profit

c. greater than its marginal cost and levy a tax on the excess profit

d. greater than its marginal cost but that minimizes the deadweight loss

e. greater than its average total cost but that minimizes the deadweight loss

Answers

Answer:

a. equal to its marginal cost and grant a subsidy to cover the loss

Explanation:

In a competitive market there is allocative efficiency non fixing of prices.

The price of commodity is equal to it's marginal cost.

A socially optimal level of output is produced thereby demand will equal marginal cost.

A monopolist however will not set price that is equal to marginal cost normally. Instead they will less goods at a higher cost and charge higher price on it.

If a government wants to regulate a monopoly the best option will be for the monopolist to set a price equal to its marginal cost and government grant a subsidy to cover the loss

Loyalty programs that are most likely to provide a sustainable advantage and to survive in the grocery industry are those that

Answers

Complete Question:

Loyalty programs that are most likely to provide a sustainable advantage and to survive in the grocery industry are those that

Group of answer choices

a) leverage data obtained from customers into more effective marketing decisions

b) save companies money by replacing other communication tools

c) result in true value creation

d) all of the above

Answer:

d) all of the above

Explanation:

Loyalty programs can be defined as a collection of activities that add rewards, discount, as well as other enticing incentives given to customers for their loyalty to a business firm or company.

Loyalty programs that are most likely to provide a sustainable advantage and to survive in the grocery industry are those that are;

a). Average data obtained from customers into more effective marketing decisions

b. Save companies money by replacing other communication tools.

c. Result in true value creation.

Page organized Google into seven business units. The vice president in charge of each unit has full responsibility for the success of his or her unit. What controls should Page have put in place to ensure that the units cooperate with each other when needed, even if it would benefit only one of the units that must work together?A. Use incentive controls that are linked to higher-level performance. B. Use output controls based on measurable financial criteria. C. Use bureaucratic controls to regulate the financial budgets and capital spending of the divisions. D. Use market controls to allocate capital resources between different divisions.Page reorganized Google into seven core business units. What type of structural form did he employ?
A. Functional structure.
B. Multidivisional structure.
C. Matrix structure.
D. Integrated structure.

Answers

Answer:

A. Use incentive controls that are linked to higher-level performance.

C. Matrix structure.

Explanation:

Since in the question it is mentioned that Google has 7 business units as organized by page also at the same time the vice president has the full responsibility with respect to the success of each units so here the control would be that by using the incentive controls that are interconnected to the performance i.e. outsanding would results into the success of the each unit.

As Google has seven business units so here the structure form is of matrix structure as it deals with more than one organization structure that involves more responsibility, authority etc

________ is the process of going from present value to future value, whereas ________ is finding the present value of some future amount.

Answers

Answer:

Compounding

Discounting

Explanation:

Compounding is simply the process of moving forward or forsight along the timeline to know,get or determine a cash flow's value in the future that is its future value. If you must calculate a cash flow's future value, you must compound it. It is also said to be the converting from a earlier point to a later. It simply do not have to be future, but maybe/actually moving forward.it uses future value.

Discounting is the process of finding the approximate value today of a future cash flow . For one to calculate the value of a future cash flow at an earlier point in time, we must discount it. It is simply the converting of money from later point to earlier point. That is moving backwards.

Compounding is the process of going from present value to future value, whereas discounting is finding the present value of some future amount.

What is discounting and compounding?

Compounding:

Compounding is merely defined as the process of moving forward or foresight along the timeline to know, get or ascertain a cash flow's value in the future that is its future value.

If a person need to compute the future value of a cash flow, he/she must compound it, and It's also referred to as converting from one point to another.

It doesn't have to be in the future, but it should be moving ahead and makes advantage of future worth.

Discounting:

Discounting is defined as the process of detecting the nearest value today of a future cash flow.

We must discount a future cash flow in order to evaluate its worth at a later point in time, and It is essentially the exchange of money from one point to another.

Therefore, the correct fill in the blanks are compounding and discounting.

Learn more about compounding, refer to:

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By seeing the hazard well in advance you leave yourself adequate reaction time to deal with the hazard.

Answers

Answer:

True

Explanation:

Anderson Co. issued a $40,216, 60-day, discounted note to National Bank. The discount rate is 10%. At maturity, assuming a 360-day year, the borrower will pay:_____.a. $40,216.b. $39,546.c. $40,886.d. $49,500.

Answers

Answer:

a. $40,216

Explanation:

Discounted Loan note does not have any periodic interest payment obligation. It is issued at a discounted value that gradually accumulates the face value of the loan note at the time of maturity.

Issuance price can be calculated as follow

Discounted value = Face value / ( 1 + periodic interest rate )^ numbers of periods

Placing values in the formula

Discounted values = $40,216 / ( 1 + 10%/360 )^60

Discounted values = $39,551.38

After 60 days accreud interest will be

Interest = $39,551.38 x ( ( 1 + 10%/360 )^60 - 1 ) = $664.62

Borrower will pay = $39,551.38 + $664.42 = $40,216

You know that the return of Cullumber Cyclicals common shares is 1.0 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 2.40 percent and market risk premium is 5.71 percent, what is Cullumber Cyclicals’ cost of common equity capital?

Answers

Answer:

8.11%

Explanation:

Cullumber Cyclicals beta = 1 since its sensitive to macroeconomic information (the whole market) is 1.

cost of equity (Re) = risk free + (beta x market premium)

Re = 2.4% + (1 x 5.71%) = 2.4% + 5.71% = 8.11%

Since the beta is 1, this specific stock should perform exactly like the market.

You are presenting a workshop on planning presentations. After a formal introduction, you will engage the audience in planning activities and tailor your content to fit their learning needs. What visual aid option should you choose?A. Multimedia slides.B. Flip charts and whiteboards.C. Transparencies.D. Video clips.E. Handouts.

Answers

Answer:

B. Flip charts and whiteboards

Explanation:

In this scenario, the best visual aid to use would be Flip charts and whiteboards. This is mainly due to the main reason that these visual aids are the best choice for being able to tailor the content to best fit the needs of your audience. Using these objects you are able to create your own visual aids on the spot to explain the topic that you are trying to demonstrate in a way that the specific audience will best be able to visualize it. Therefore, making it the best option in this scenario.

Click this link to learn about a career as a Multimedia Artist. What are some common tasks? Check all that apply.

constructing sets for theater productions
creating designs for the interiors of customers’ homes
creating graphics and animation, using computer programs and illustration
working with a team to create a movie, game, or visual effect
researching upcoming projects
supervising teams of workers

Answers

Answer:

3,4,5

Explanation:

Just did it on edge

Some common tasks of a Multimedia Artist include creating graphics and animations using computer programs and illustration, working with a team to create movies, games, or visual effects, and researching upcoming projects. Therefore, options C, D, and E are correct.

What are the tasks of Multimedia Artist?

Multimedia artists are responsible for creating digital artwork and visual effects using a combination of technology, design, and creativity. They work in a variety of fields, including film, television, advertising, video game development, and more.

Some of the tasks that multimedia artists may perform include designing and creating 2D and 3D animations, developing interactive multimedia presentations, creating digital illustrations, designing and developing video games, developing visual effects for films and television shows, and producing advertising campaigns.

They may also work with sound designers and composers to create multimedia projects with soundtracks and voice-overs.

To accomplish these tasks, multimedia artists may use a variety of software and tools, including graphic design software, 3D modeling software, video editing software, and animation software. They must also possess a keen eye for design and an understanding of the latest trends and technologies in multimedia production.

Learn more about the tasks of Multimedia Artist here:

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#SPJ3

Helppp very please thank uuuu!!!

Answers

Answer:

7

Explanation:

meow

If Sarah invests $1,000 today, what will it be worth in 40 years if she can earn 12% interest per year

Answers

Answer:

$93,050.97

Explanation:

P = $1,000

N = 40 years

I = 12% annually

Future value = P*(1+i)^n

Future value = $1,000*(1+0.12)^40

Future value = $1,000*(1.12)^40

Future value = $1,000*93.050970

Future value = $93,050.97

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