What is the price of a perpetuity that has a coupon of $70 per year and a

Question:

What is the price of a perpetuity that has a coupon of $70 per year and a yield to maturity of 1.5%? If the yield to maturity doubles, what will happen to the perpetuity’s price?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

The Economics Of Money Banking And Financial Markets

ISBN: 9781292268859

12th Global Edition

Authors: Frederic S. Mishkin

See More Books

Question Posted: Mar 21, 2024 11:01 PM

See More Questions

Consider a bond with a 7% annual coupon and a face value of $1,000. Complete the following table. years to maturity-3-3-6-9-9 yield to maturity-5-7-7-7-9 current price-x-x-x-x-x What is the yield to...
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
A drillstring is composed of 9,000 ft of 5-in. 19.5-lbm/ft drillpipe and 1.000 ft of drill collars having a 3.0-in. ID. Compute these items: a) (5 pts) Capacity of the drillpipe in barrels. b) (5...
Margin of error = 0.04; confidence level = 99%; educated guess = 0.5 a. Obtain a sample size that will ensure a margin of error of at most the one specified (provided of course that the observed...
The distance travelled (in km) by a courier service motorcycle on 50 trips was recorded by the driver. 24 30 20 28 23 17 16 21 20 18 19 22 26 31 21 13 15 20 18 20 34 29 24 23 25 17 35 29 19 10 17 11...
Consider the following cash flow profile and assume MARR is 10 percent/year. a. Determine the IRR(s) for this project. b. Is this project economically attractive? EOY 0 1 2 3 4 5 6 NCF -$101 $411...
In December 2011, the Hamilton County Board of Commissioners established the Hamilton County OPEB Trust Fund. Retired employees of Hamilton County can participate in post-employment benefits through...
v = [-21 0]T V = [101]T V1 Are the basis vectors v and v orthogonal? (Provide proof of your answer) the current basis vectors are not orthogonal, use projection to find v, the component of v...
Property taxes in a particular district are 2% of the purchase price of a home every year. If you just purchased a $$150$,000 home, what is the present value of all the future property tax...
Consider a coupon bond that has a $$900$ par value and a coupon rate of 6%. The bond is currently selling for $$860.15$ and has two years to maturity. What is the bonds yield to maturity?
Sven Smorgasbord is 35 years old and is presently experiencing the "good" life. As a result, he anticipates that he will increase his weight at a rate of 3 percent a year. At present he weighs 200...
Name 25 points Class: Time: (In: criticalperiodtstla.ws) PLEASE read all questions in this document The assignment is presented to stimulate critical thinking skills towards information presented in...
When would a preferred stock with a stated maturity most likely see its largest decline in price? Select answer from the options below Never, as a stated maturity date for preferred stock is not...
Buttery Ice-Cream had sales of $7.25 million in 2020. Its cost of goods sold was $4.5 million, and it had $1.2 million in selling, general, and administrative expenses. It paid interest of $21000 and...
what are some financial measurement tools that an investor can use to make a sound decision?
Providers in capitated managed care plans who are paid flat monthly fees
You are designing a diving bell to withstand the pressure of seawater at a depth of 250 m. (a) What is the gauge pressure at this depth? (You can ignore changes in the density of the water with...
On average there are four traffic accidents in a city during one hour of rush-hour traffic. Use the Poisson distribution to calculate the probability that in one such hour there arc (a) No accidents...
The independence of the Fed has meant that it takes the long view and not the short view". Is this statement true, false, or uncertain? Explain your answer.
The Fed promotes secrecy by not releasing FOMC directives to Congress or the public immediately. Discuss the pros and cons of this policy.
Using T-accounts show what happens to checkable deposits in the banking system when the Fed sells $2 million of bonds to the First National Bank.
How do changing family structures, including the rise of single-parent households, cohabitation, and delayed marriage, influence social cohesion, intergenerational relationships, and caregiving...
Midnight Sun Apparel Company uses normal costing, and manufacturing overhead is applied to work-in-process on the basis of machine hours. On January 1 of the current year, there were no balances in...
What role does social capital play in fostering community resilience, civic engagement, and collective action, and how can it be cultivated and leveraged to address pressing social challenges?

What is the price of a perpetuity that has a coupon of $70 per year and a

Question:

Step by Step Answer:

Given Coupon payment C 70 per year Yield to maturity r 15 or 0015 Price of the ...View the full answer

The Economics Of Money Banking And Financial Markets

Students also viewed these Business questions