Question
Please help me answer and also explain how do you get the answer (using formula) for these multiple choice questions below: A corporate bond makes
Please help me answer and also explain how do you get the answer (using formula) for these multiple choice questions below: A corporate bond makes payments of $15 every quarter for 10 years with a final payment of $2 015. Which of the following best describes this bond
a) 10-year bond with a face value of $2 015 and a coupon rate of 2.25% with quarterly payments
b) 10-year bond with a face value of $2 000 and a coupon rate of 2.25% with quarterly payments
c) 10-year bond with a face value of $2 000 and a coupon rate of 3.00% with quarterly payments
d) 10-year bond with a face value of $2 015 and a coupon rate of 3.00% with quarterly payments A vintner is deciding when to release a vintage of Pinot Noir If it is bottled and released now, the wine will be worth $1.2 million. If it is barrel-aged for a further year, it will be worth 20% more, though there will be additional costs of $200 000. What is the difference in the benefit the vintner will realise if he releases the wine after barrel-aging it for one year or if he releases the wine now?
a) He will earn $240 000 less if he releases the wine now.
b) He will earn $256 800 less if he releases the wine now.
c) He will earn $40 000 less if he releases the wine now.
d) He will earn $40 000 more if he releases the wine now.
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