Consider a Hydro Quebec bond with a face value of $1000, and a present value of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider a Hydro Quebec bond with a face value of $1000, and a present value of $1071. If this bond is offered for sale at $1135, then Hydro Quebec will be forced to change the face value of the bond. the equilibrium market price of this bond has been achieved. individuals will purchase the bond at the offer price which will drive up the price further. excess demand of this bond will drive the price up until it reaches its equilibrium market price. excess supply for this bond will drive the price down until it reaches its equilibrium market price of $1071. Consider a Hydro Quebec bond with a face value of $1000, and a present value of $1071. If this bond is offered for sale at $1135, then Hydro Quebec will be forced to change the face value of the bond. the equilibrium market price of this bond has been achieved. individuals will purchase the bond at the offer price which will drive up the price further. excess demand of this bond will drive the price up until it reaches its equilibrium market price. excess supply for this bond will drive the price down until it reaches its equilibrium market price of $1071.
Expert Answer:
Answer rating: 100% (QA)
Correct option is E Excess supply of the bond will drive the price down until ... View the full answer
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
Posted Date:
Students also viewed these accounting questions
-
Consider a 3-year zero-coupon bond with a face value of $100 and a yield of 4% (annually compounded). Compute this bond's modified duration, dollar duration, and DVBP.
-
A one-year discount bond with a face value of $1,000 was purchased for $900. What is the yield to maturity? What is the yield on a discount basis?
-
A zero coupon bond with a face value of $20,000 matures in 10 years. What should the bond be sold for now if its rate of return is to be 4.194% compounded annually? Refer to zero coupon bonds. A zero...
-
Dominic and Jared were general partnership has equal partners Dominic contributes cash 25,000 securities values at 50,000 and they adjusted basis of 32,000 and equipment valued at 25,000 and an...
-
Adam and Arin Adams have collected their personal income and expense information and have asked you to put together an income and expense statement for the year ended December 31, 2012. The following...
-
Solve the linear programming problems in Problems using the simplex method. Maximize P = 4x1 - 3x2 + 2x3 Subject to x1 + 2x2 - x3 < 5 3x1 + 2x2 + 2x3 < 22 x1, x2, x3 > 0
-
Bank Reconciliation} Tiny Corp. prepares monthly bank reconciliations of its chequing account balance. The bank statement for October 2018 indicated the following: An analysis of cancelled cheques...
-
Cortez Company is planning to introduce a new product that will sell for $96 a unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year: Direct...
-
For each separate case, record the necessary adjusting entry. a . On July 1 , Lopez Company paid $ 1 , 2 0 0 for six months of insurance coverage. No adjustments have been made to the Prepaid...
-
In preparing for the upcoming holiday season, Mandrell Toy Company designed a new doll called Freddy. The fixed cost to produce the doll is $100,000. The variable cost, which includes material,...
-
Asking subjects "Did your children go to high school?" after they told you that they have no children violates which of the following criteria in question construction in surveys? Avoid double-barrele
-
Consider the same simple setting used in the TRS setting. Bank A, a highly rated bank, has a funding cost of Libor (L) rate, while Bank B, a lower rated entity, has a funding cost of L + 40 basis...
-
Real Options are managerial flexibility to alter the fundamentals of a project based on evolving information. Typical examples include the option to expand, contract, delay, or abandon a project....
-
PART A:Banks and other mortgage originators often securitise long-term assets like mortgages, to ensure liquidity. Briefly outlinethe process of bank securitisation[2 marks] PART B:Sunshine Ltd plans...
-
Wilson Inc. uses bonds and common shares to finance its investments and operations. The firm's debt consists of 20,000 bonds that are currently trading at a price of $1038.75 each and yielding a...
-
Recent problems facing the U.S. financial system were the result of all but which one of the following? a. An increase in the use of commercial paper for short-term financing b. The government...
-
Assume that is an angle in standard position whose terminal side contains the point(5.-12). Find the exact values of the following functions.sin ?=(Simplify your answer. Type an integer or a...
-
Write electron configurations for the following ions, and determine which have noble-gas configurations: (a) Cd2+ (b) p3- (c) Zr4+ (d) Ru3+ (e) As3- (f) Ag+
-
Compute the number of dollars that can be bought with two million of each foreign currency units: a. $1 = 20,864 Vietnamese dong b. $1 = 6.300 Venezuelan bolivar fuerte c. $1 = 9.175 South African...
-
You own stock in Make-UP-Artists, Inc. which has just made a bid of $30 million to purchase MHM Corporation. MHM Corp. currently has total cash flows of $2.5 million that are expected to grow...
-
You are considering a stock investment in one of two firms (Lots of Debt, Inc. and Lots of Equity, Inc.), both of which operate in the same industry. Lots of Debt, Inc. finances its $30 million in...
-
Explain what is meant by feedforward control and distinguish it from feedback control. R-1
-
Computing Ending Balance of Retained Earnings LO1-1 Sultan Inc. was organized on January 1, 2020. It reported the following for its first two years of operations: Required: Compute the ending balance...
-
What is meant by a variance? What is the point in analysing variances? R-2
Study smarter with the SolutionInn App