A man buys a corporate bond from a bond brokerage house for $925. The bond has a
Question:
A man buys a corporate bond from a bond brokerage house for $925. The bond has a face value of $1000 and pays 4% of its face value each year. If the bond will be paid off at the end of 10 years, what rate of return will the man receive?
Face ValueFace value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (7 reviews)
PW of Cost PW of Benefits 925 40 PA i 10 100...View the full answer
Answered By
Mario Alvarez
I teach Statistics and Probability for students of my university ( Univerisity Centroamerican Jose Simeon Canas) in my free time and when students ask for me, I prepare and teach students that are in courses of Statistics and Probability. Also I teach students of the University Francisco Gavidia and Universidad of El Salvador that need help in some topics about Statistics, Probability, Math, Calculus. I love teaching Statistics and Probability! Why me?
** I have experience in Statistics and Probability topics for middle school, high school and university.
** I always want to share my knowledge with my students and have a great relationship with them.
** I have experience working with students online.
** I am very patient with my students and highly committed with them
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Economics questions
-
A $7500 loan will be paid off by four equal payments to be made 2, 5, 9, and 12 months after the date of the loan. What is the amount of each payment if the interest rate on the loan is 9.9%?
-
A bond has a face value of $1,000, is redeemable in eight years, and pays interest of $100 at the end of each of the eight years. If the bond can be purchased for $981, what is the rate of return if...
-
A 10-year German government bond (bund) has a face value of 100 euros and an annual coupon rate of 5%. Assume that the interest rate (in euros) is equal to 6% per year. What is the bond's PV?
-
Using the aggregate expenditures table below, answer the questions that follow. a. Compute the APC when income equals $2,300 and the APS when income equals $2,800. b. Compute the MPC and MPS. c. What...
-
1. The simple interest on an investment is directly proportional to the amount of the investment. An investment of $3250 earns $113.75 after 1 year. Find a mathematical model that gives the interest...
-
Alternative methods of joint-cost allocation, product-mix decisions. The Southern Oil Company buys crude vegetable oil. Refining this oil results in four products at the splitoff point: A, B, C, and...
-
A 17% rate of return is required on a certain asset. The acquisition of that asset is financed entirely by equity. What rate of return do shareholders require on it? If the asset were financed...
-
Organic Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has...
-
Parks Corporation is considering an investment proposal in which a working capital investment of $25,000 would be required. The investment would provide cash inflows of $4,000 per year for six years....
-
Maggie's Magazines (MM) has straight nonconvertible bonds that currently yield 9%. MM's stock sells for $22 per share, has an expected constant growth rate of 6%, and has a dividend yield of 4%. MM...
-
Peter Minuet bought an island from the Manhattoes Indians in 1626 for $24 worth of glass beads and trinkets. The 1991 estimate of the value of land on this island was $12 billion. What rate of return...
-
A well-known industrial firm has issued $1000 bonds that carry a 4% nominal annual interest, rate paid semiannually. The bonds mature 20 years from now, at which time the industrial firm will redeem...
-
Solve the inequality x 2 5x + 6 0.
-
Consider an expression of the form . ax2 + bx + c 0 (mod N) 1. Show that the 's of the following form are solutions of the above system:. x (b b2 4ac) (2a) (mod N) when and is a Quadratic Residue mod...
-
According to the needs based model of resource allocation, those individuals with the greatest needs should be allocated the most resources by society, by placing the needs of the individual above...
-
What is the relationship between interest rate level and bond price? Why must this relationship be true? How has the current rate environment impacted the prices of bonds? What are some factors to...
-
Suppose the government gives a guaranteed minimum price for sugar of $.25 cents a pound - and agrees to purchase any surplus which is subsequently destroyed. Demand and Supply are: Qd 200,000...
-
There are four areas in the Balanced Scorecard: Financial Perspective Customer Perspective Internal Business Perspective Innovation and Learning Perspective Please provide perspective for each....
-
Beebe Company sold goods on account with a sales price of \($50,000\) on August 17.The terms of the sale were 2/10, n/30. Instructions: 1. Record the sale using the gross method of accounting for...
-
Medi-Exam Health Services, Inc. (MEHS), located in a major metropolitan area, provides annual physical screening examinations, including a routine physical, EKG, and blood and urine tests. MEUS's...
-
What is the main characteristic of money market transactions which enables it to have active secondary market?
-
The Ace Bicycle Company3 produces bicycles. This year's expected production is 10,000 units. Currently Ace also makes the chains for its bicycles. Ace's accountant reports the following costs for...
-
A machine now in use was purchased four years ago at a cost of $20,000. It has a book value of $6,246. It can be sold for $7,000, but it could be used for three more years, at the end of which time,...
-
The double-declining-balance method is to be used for an asset with a cost of $88,000, an estimated salvage value of $13,000, and an estimated useful life of six years. (a) What is the depreciation...
-
Lunar Entertainment is a provider of cable, Internet, and on-demand video services. Lunar currently sends monthly bills to its customers via the postal service. Because of a concern for the...
-
ACCT2020-301 Class Project Lease vs. Buy - Capital Budgeting BACKGROUND ONE OF EVERY THREE NEW CARS ON THE ROAD is leased, and consumers are confronted frequently with the decision of whether to buy...
-
The Elements Corporation Soru 1. Elements is an upscale university housing complex providing all the amenities of private townhouse living, and a full service 24-hour cafeteria for busy students....
Study smarter with the SolutionInn App