Question

Question 26 (Mandatory) (0.5 points) A 4.25 percent coupon bond with eight years left to maturity is offered for sale at $983.36. What yield to maturity is the bond offering? (Assume interest payments are paid semi-annually and par value is $1,000.) 4.50 percent 2.25 percent Oo oo 4.25 percent 2.36 percent

Answer 1

The answers are as follows:

Question 26. The corred option is 4.50%. We can solve this question using financial Calculator. Set: Begin / End Ni Number of periodo 17 : Interest per period. PV: Present Value. PMT: Amount of each Annuity. fv: future Value Nowog СчPD Set: End n=8x2= 16 1% - SOLVE 2. 249994014 PV, - 983-36 PMT= (1000 x 4.25%) = 2 = 21:25 PV = 1000

.: Nominal per annum.compounded semi - annually _= 2.25%. X2 - 4.5'). Yield to Maturity of the bond = 45% Question 27 The correct option is Vertical line. Possible shopes for the yield curve include: Uproard Sloping : This is the most common shape for the curve also referred to as the normal areve. Humbed: A humped yield curve occurs when Medium term yields are goeater than both short terem yielde and long terem yields. Horizontal line: A flat were happens when all matwrities have since love yields.

Question 28 The corred of tion is common stockholders. Equity claims are also called 'residual claims? Hence, common stockholders are said to have a residual claim on the firm's assets, which is the value leftover after all other claims have been paid.