Dave invests in a bond that yields 3. 50% annual effective for 10 years. The bond pays coupons at a rate of 3. 50%, payable semi-annually. It has a redemption value of $75. Mike invests in a 5 year bond. The bond pays coupons at a rate of 14. 00%, payable quarterly. It has a redemption value of $150. Mike paid twice the price for his bond compared to what Dave paid. Both bonds have a face amount of $100. Calculate the annual effective yield for Mike's bond

Answers

Answer 1

The annual effective yield for Mike's bond is 3.20%, which is less than Dave's 3.50%.

What is the annual effective yield of a bond?

The annual effective yield is the total return expected from a bond if the bond is held till maturity.

The annual effective yield rate is the rate at which all future expected cash flows are discounted to find out the current value or the price of the bond.

We can use the following Yield to Maturity formula to calculate the annual effective yield rate.

Yield to Maturity = [Annual Interest + {(FV-Price)/Maturity}] / [(FV+Price)/2]

Data and Calculations:

Mike's investment:

Quarterly Interest = $3.50 ($100 x 14% x 1/4)

Annual interest = $14 ($100 x 14%)

FV = Face Value of the Bond = $100

Price = Current Market Price of the Bond at Redemption = $150

Maturity = Time to Maturity = 5 years

= {$14 + ($100 - $150)/5} / {($100 + $150)/2}

= $14 + -10 / 250/2

= 4/125

= 3.2%

Thus, the annual effective yield for Mike's bond is 3.20%, which is less than Dave's 3.50%.

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Related Questions

3. What challenges do you anticipate in implementing some of the above steps? Explain.

Answers

In implementing some of your steps, anticipate the challenges as they are bound to e related to your specific goal.

What are challenges?

Generally, challenges are simply a competitive situation to determine who is superior in a specific field.

In conclusion, in carrying out set goals, missions, or said steps or series of activities we tend to meet challenges, and these challenges are anticipated by the nature of activity.

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When the Fed buys bonds the supply of money Group of answer choices increases and so aggregate demand shifts right. decreases and so aggregate demand shifts left. decreases and so aggregate demand shifts right. increases and so aggregate demand shifts left. Flag question:

Answers

When the Fed buys bonds the supply of money increases and so aggregate demand shifts right.

What is the impact of the Fed buying bonds?

When the Fed buys bonds, it is known as an expansionary monetary policy. Expansionary monetary policy increases the supply of money in the economy.

When the supply of money increases, disposable income increases and this increases the demand of goods in the economy. This shifts the aggregate demand  cuve to the right.

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Assuring consumers that the company follows responsible information practices and that there are consequences for failing to do so is called:

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A notice/awareness is a business ethics term that refers to informing customers that the firm uses responsible information practices.

What is a business code of ethics?

A business ethics code is a collection of governing principles meant to guarantee that a company and its workers operate with honesty, truthfulness, and integrity in all aspects of its daily operations and only participate in activities that contribute to the betterment of the consumers in the society.

A notice/awareness is a business ethics term that refers to informing customers that the firm uses responsible information practices and that there are repercussions for failing to do so.

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As marketing manager for BoomBees Industries, you should be aware that legislation affecting business around the world will continue to

A. Exist

B. Increase

cremain steady

O D. Decrease

E threaten the Ghanaian domestic economy

Reset selection

Answers

As marketing manager for BoomBees Industries, legislation affecting business around the world will continue to increase.

Who is a manager?

A manager simply means an individual who controls and guides other staffs in the organization to achieve a common goal.

In this case, as a marketing manager for BoomBees Industries, legislation affecting business around the world will continue to increase.

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The British government increased the national debt from $75 million to $133 million by borrowing from ________ and British bankers.

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The British government borrowed from the Dutch and British bankers and this increase its national debt from $75 million to $133 million.

What is a national debt?

This means the total amount of all debts owed by the government of a country.

These debt are used to service infrastructure, cater expenditure when there are insufficient revenue to cater for such.

Therefore, the British government borrowed from the Dutch and British bankers.

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The term _________________ refers to the additional utility provided by one additional unit of consumption.

Answers

Answer:

Marginal Utility

Explanation:

Marginial Utility is the term used to describe the additional amount of utility (utils) given by consuming one additional unit of a product.

For example, the first bite of a cupcake could be 20 utils.

If the second bite of cupcake adds 15 utils (up to 35 utils), then the marginal utility is 15 utils.

Using the information provided, calculate the direct materials quantity variance. Standard price $3.00 per pound Actual price: $3.20 per pound Actual quantity used: 5,200 pounds Standard quantity allowed: 5,000 pounds

Answers

Based on the actual quantity used and the standard quantity allowed, the direct materials quantity variance is $600 Unfavorable.

What is the direct material quantity variance?

This can be found by the formula:

= (Standard Quantity allowed - Actual quantity used) x Standard price

Solving gives:

= (5,000 - 5,200) x 3

= $600 Unfavorable

In conclusion, the variance is unfavorable because the standard quantity is lower than the actual quantity.

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Match each participant in the economy with one action that contributes to
the circular flow of the free-market system,
Consumers
?
Providing investment
capital
Governments
?
Paying wages
Producers
?
Collecting taxes

Answers

Consumer - Provide investment

Government - collecting tax

Producer- Pay wages

What is free market?

Free market is a market that allows people or individual to trade without restrictions by the government.

It allows for inter trade without any policies by the government. The market is determined by the sellers.

Therefore, action that contributes to

the circular flow of the free market is

Consumer - Provide investment

Government - collecting tax

Producer- Pay wages

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A manufacturer who want to encourage repeat purchases and offer the consumer an immediate reward might consider what type of promotion?

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A manufacturer who wants to encourage repeat purchases and offer the consumer an immediate reward might consider what type of promotion?

   ⇒ online coupons

Hope that helps!

Your friend is thinking of hiring a financial planner to help him manage his portfolio. What should he be on the lookout for? Why?

Answers

Answer:

You should look for How much money should I invest and where? What is my current net worth? Can I afford to retire? How do I invest to achieve my short and long-term life goals? How much money do I need and when? You should ask these questions because they are important to consider when your going to hire someone in the financial business.

Explanation:

However, these may not be what most people ask when they are going to hire a financial planner. This is just what I would question them and myself about.

A(n) _____ system is a computer-based information system that produces standardized reports in summarized structured form to support middle managers.

Answers

Answer:

The management information system(MIS)

What defines, recommends, and sets flexible supply chain strategies based on an organization’s operations and resources?.

Answers

The thing that defines recommends, and sets flexible supply chain strategies based on an organization's operations and resources are supply chain optimization.

What do you mean by supply chain strategy?

Supply chain strategy management means the involvement in the movement of products or services from suppliers to distributors.

Supply chain optimization aims at ensuring the optimal operations of a manufacturing and distribution supply chain. Supply chain optimization has applications in all the manufacturing industries distributing retail, industrial, and packaged goods.

Therefore, supply chain optimization recommends and sets flexible supply chain strategies based on an organization's operations and resources.

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Which of the following statements is correct? assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

Answers

If a project's NPV is less than zero, then its IRR must be less than the WACC is correct in the project being considered has normal cash flows, with one outflow followed by a series of inflows.

What is normal cash flow?

The normal cash flow stream consists of an initial investment outlay followed by positive net cash flow throughout the project's life cycle.

It's also known as a traditional cash flow stream. In a traditional cash flow stream, cash flows only change direction once.

Thus, if project is NPV is less than zero IRR is less then WACC

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If stockholders were upset that eric yuan allowed security problems to surface because he was focused on other things, the situation could be considered an example of.

Answers

If the stockholders of the company get mad at Eric Yuan for focusing on other things and allowing security problems to emerge, this is the Principal-Agent problem.

What is the Principal-Agent Problem?

This refers to a situation where the agent (management) do not act in the best interest of the principal (stockholders) and instead focus on their own issues.

In this scenario, Eric Yuan is most likely the agent and the stockholders are angry with him for not acting in their best interest by letting security problems arise.

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One important advantage of forming a partnership is that this form of business organization gives each owner sole control over the business. True False

Answers

ANSWER

Most U.S. businesses have no employees other than the owner. One important advantage of forming a partnership is that this form of business organization gives each owner sole control over the business.

A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate.

Answers

A decrease in the discount rate increases bank reserves and increase the money supply if banks respond appropriately to the change in the rate.

What is discount rate?

Dscount rate serves as the rate of interest that the central bank charges on its loans and advances to a commercial bank.

Therefore, when there is increase in discount rate, there will be increase in money supply.

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The standard overhead applied is based on the ______ level of activity multiplied by the predetermined overhead rate. Multiple choice question.

Answers

The standard overhead applied is based on the actual level of activity multiplied by the predetermined overhead rate.

Preston has to make four phone calls to clients today. the call to mr. miller will take about an hour to complete, the call to ms. winnecuit will take about five minutes to complete, the call to mr. drudge will take about thirty minutes and the call to mrs. french will take about fifteen minutes to complete. if all the calls are equally important, who should preston call last? a. mr. miller (1 hour) b. ms. winnecuit (5 minutes) c. mr. drudge (30 minutes) d. mrs. french (15 minutes) please select the best answer from the choices provided a b c d

Answers

Answer:

miss winnecuit the explanation above

Answer:

A. Mr Miller (1 Hour)

Explanation:

edg I promise I got a 100%

From a liquidity standpoint, which is more desirable for a company to have?.

Answers

current assets exceed current liabilities.

ABC Company supplies ink cartridges for printers on the aftermarket (i. E. They sell replacement cartridges). The demand for the cartridge is 400 units per week, with a standard deviation of demand of 30 units per day. The holding cost of the cartridge is $3/unit/year while the ordering cost is $190/order. The company works for 50 weeks per year at 5 days per week. The desired service level for this part is 99%, it takes 5 days to get it from the supplier. The company is investigating the possibility of implementing a continuous review (EOQ) inventory system. Assume that you found the economic order quantity is 1400 units. How many times on average would you need to place an order for ink cartridges next year (rounded up to nearest whole number)

Answers

By implementing a continuous review (EOQ) inventory system with an EOQ of 1,400 units, ABC Company should place 15 orders for ink cartridges next year.

What is an EOQ inventory system?

An EOQ (Economic Ordering Quantity) inventory system is an inventory management technique that ensures:

Efficient inventory management decisions.The optimal amount of inventory is ordered.Annual demands are met.Holding and ordering costs are minimized.

Thus, by implementing a continuous review (EOQ) inventory system with an EOQ of 1,400 units, ABC Company should place 15 orders for ink cartridges next year.

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Mr. Carpenter devotes his working time to producing tables and chairs. An increase in the demand for chairs will result in

Answers

Answer:

An increase in his opportunity cost of producing tables

Explanation:

Mr. Carpenter devotes his working time to producing tables and chairs. An increase in the demand for chairs will result in an increase in his opportunity cost of producing tables.

What is demand curve?

There has difference between changes in demand and changes in quantity demanded. The entire curve showing the various combinations of price and quantity demanded represents the demand curve. A change in the price of the good does not shift the curve (or change demand) but causes a movement along the demand curve.

The price plays a crucial role in maintaining the supply and the demand chain, as with the decrease in the price, there will be an increase in the demand and this affects the supply chain which is reduced.

The supply has been the practice of the serving commodities in the market, while the demand has been the requirement of the commodity in the market.

Therefore, Mr. Carpenter devotes his working time to producing tables and chairs. An increase in the demand for chairs will result in an increase in his opportunity cost of producing tables.

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Which of the following is not a true statement about filing bankruptcy? a. bankruptcy erases all of your debt. b. it is possible to rebuild your credit after filing bankruptcy. c. there are exemptions that allow you to keep essentials. d. bankruptcy stops aggressive action by creditors. please select the best answer from the choices provided a b c d

Answers

Bankruptcy does not clear all the debt. Under Bankruptcy, not all debts can be discharged, however, and some are very difficult to discharged.

What is Bankruptcy?

Bankruptcy is a legal process in which individuals or other organizations who are unable to repay their debts to their creditors may seek relief from some or all of their debt.

In many places, a lawsuit was probably settled out of court, as the debtor was likely to pay.

Bankruptcy gives people in debt the opportunity to restart by closing or by restructuring. In both cases, the court may impose a fine on the debt.

Once the debt has been settled, the lender will no longer be able to take action against the debtor, such as trying to collect debt or take any security.

Thus, Option a. bankruptcy erases all of your debt is the correct answer.

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Suppose you are working for a small start up as a purchasing agent. You are purchasing a product that requires that you pay in bitcoins. The product costs 1.75 bitcoins. The exchange rate is 0.0035 bitcoins per dollar. What will the product cost you in U.S. dollars

Answers

The product cost in US dollars given the exchange rate of bitcoins per dollar is $500.

What is the product cost in US dollars?

The exchange rate is the rate at which one currency is exchanged for another currency. In this question, 1 dollar is equivalent to 0.0035.

$1 = 0.0035 bitcoins

1.75 / 0.0035 = $500

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A patent lasts for twenty years and is renewable after this term.
true false

Answers

Answer:

i think false if you get it wrong you fault for agreeing with me WC

Explanation:

contrast direct taxes with indirect taxes.

Answers

Direct tax is a tax that is paid by the assesses to the government directly, whereas the indirect tax is one which is paid by the assesses indirectly to the government.

What is the difference between direct taxes and indirect taxes?

A direct tax is one that is paid by the person directly to the government, here the burden of tax is not shifted to anyone.

Example: Income tax, wealth tax, gift tax, etc.

An Indirect tax is one that is paid by the person indirectly to the government, here the burden of tax is shifted to any person.

Example: Goods and Services Tax, custom duty, excise duty, etc.

Therefore, the direct tax is paid to the Central Board of Direct Tax and the indirect tax is paid to the Central Board of Indirect Tax.

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To positively stimulate an economy using fiscal policy, government spending should ______, and taxes should ______.

Answers

Answer:
rise;fall

Explanation:

The government might issue tax stimulus rebates to increase aggregate demand and fuel economic growth. The logic behind this approach is that when people pay lower taxes, they have more money to spend or invest, which fuels higher demand.

Which of the following illustrates the most economically sound choice for brad? buying both a car and a home leasing both a car and home buying a car and leasing a home leasing a car and buying a home

Answers

Buying both a car and a home best illustrates economics sound choice of brad.

What is a brad?

A brad is a device that have a slight projection that help to fasten paper or object. It is a thin, soft metal, such as shim brass, wihich has a round head and a flat, split shank, which spread wide on pages or as a cotter pin or a split rivet.

They are use to attach shoe moldings and fastened small ornamental parts on furnitures Brads are use to glue wooden parts together.

Therefore, Buying both a car and a home best illustrates economics sound choice of brad.

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Answer: Keep it simple: A    

Explanation:

buying both a car and a home

In both perfect competition and monopolistic competition, each firm Group of answer choices has some monopoly power. sells a product that is at least slightly different from those of other firms. faces a downward-sloping demand curve. has many competitors.

Answers

In both perfect competition and monopolistic competition, each firm has many competitors.

What is a perfect competition and monopolistic competition?

A perfect competition is when there are many buyers and sellers of  similar goods and services. Market prices are set by demand and supply. There are no barriers to entry or exit of firms into the industry.

A monopolistic competition is when there are many firms selling slightly different products in an industry. A monopolistic competition faces a downward sloping demand curve.

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How long it will take for an investment of 3000 dollars to double in value if the interest rate is 8 percent per year, compounded continuously

Answers

Answer:

8.66435 years

Explanation:

With no annual or monthly contribution, and no inflation, it'll take around this long.

When developing an advertising campaign, the company first identifies and analyzes the target audience then

Answers

Answer: defines the advertising objectives

Explanation:

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