Question

Gabriele Enterprises has bonds on the market making annual payments, with seven years to maturity, a par value of $1,000 and selling for $974. At this price, the bonds yield 7.2 percent. What must the coupon rate be on the bonds.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Finance

Bond Markets

Bonds

Related Finance Q&A

Find answers to questions asked by students like you.

Q: A Japanese company has a bond outstanding that sells for 90 percent of its 100,000 par value. The bo...

A: Information Provided: Maturity = 19 years Present value = $-90,000 Fair value = $100,000 Payment = $...

Q: You want to buy a $214,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan ...

A: a) Mortgage amount = Cost of home - Down payment  Monthly payments are calculated using excel PMT fu...

Q: 9) see picture

A: The constant growth model is a method for valuing the share price of a stock. It calculates the intr...

Q: Which of the following actions would be likely to reduce potential conflicts of interest between sto...

A: option C is correct  The composition of the board of directors is changed from all inside directors ...

Q: You want to buy a $212,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan ...

A: a) Amount of down payment = cost of house * % of down payment 

Q: When your first child is born, you begin to save for college by depositing $600 per month in an acco...

A: Annuity means number of payments which are equal in size and made at equal interval of time. Person ...

Q: Isabella placed $5,000 in a savings account which earns 5.3% interest, compounded every year. How mu...

A: The formula used as follows: A=P×1+rn

Q: Below the table, make intelligent remarks about the numbers.  They tell a story, but only through yo...

A: Profit margin: Nike's profit margin was highest in the year 2019, which implies that the profits as ...

Q: Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to ma...

A: AFTER TAX COST OF DEBT =RD×1-TAX

Q: The equipment has a delivered cost of $57,000. An additional $3,000 is required to install the new e...

A: Hi there. Thanks for the question. Question has multiple sub parts. As per company guidelines expert...

Q: Explain the parameters or situations used to determine if the operating and financial leverages are ...

A: Operating leverage is based on the cost structure of the company. It is the extent of fixed and vari...

Q: Stocks A and B have the following historical returns: Year Stock A return Stock B return ...

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for you...

Q: 2. A new machine is expected to cost Php 300, 000 and have a life of 5 years. Maintenance costs will...

A: Calculate he present value of expected costs

Q: Sales (30,000units)                                                                  P 150,000      ...

A: Degree of operating leverage = Contribution / (contribution - fixed cost)  

Q: On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fi...

A: Discounting is a technique through which PV of future amount is computed by using appropriate discou...

Q: ​(Annual percentage yield​) Compute the cost of the following trade credit terms using the compoundi...

A: Effective annual rate/annual percentage yield is the cost of trade credit with compounding formula. ...

Q: Year 1-Year Forward Rate 1 4.6 % 2 4.9 % 3 5.2 % 4 5.5 % 5 6.8 %       What should th...

A: GIVEN, PAR = $1000 FORWARD RATE OF ONE YEAR ZERO COUPON BOND = 4.6% PRICE =PAR1+R=$10001+4.6%=$956.0...

Q: A state lottery commission pays the winner of the “Million Dollar” lottery annual installments of $5...

A: Present value of continuously compounding annuity = Cashflow/ (e^r )-1    

Q: 1) see picture

A: Formula for calculating dividend is: Dn = Dn-1*(1+g) Where D is the dividend N is the time period g ...

Q: A couple purchasing a home budget $1,800 per month for their loan payment. If they have $25,000 avai...

A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two type...

Q: 1.How does adding stocks to a portfolio affect its volatility?   2. What is the efficient frontier? ...

A: 1 Adding stock to portfolio change volatility of portfolio if high beta stock are added than it woul...

Q: Round to four decimal​ places.

A: Expected Return on stock J = sum of  (Expected return * probability)

Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option g...

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If y...

Q: You have the opportunity to make an investment that costs $1.000,000. If you make this investment no...

A: Net present value is the capital budgeting technique that evaluates the project on the basis of the ...

Q: a. What was the total cost to Douglas? Total cost b. If Douglas had $450 in his pocket, what does he...

A: The money value at which any good/service is available to consumers is known as Sales Price. It is t...

Q: Willie deposits a fixed monthly amount into an annuity account for his child’s college fund. He wish...

A: Here, to calculate the monthly contribution we have to use the formula of future value of annuity. a...

Q: Please answer using the methods or patterns of comparison. Thank You!

A: Computation:

Q: Consider a 20-year mortgage for $174,334 at an annual interest rate of 5%. After 8 years, the mortga...

A: Time period = 20 years  Value of mortgage = $174,344 Annual interest rate = 5% Refinancing time peri...

Q: Suppose you inherited 100,000 and invested it at 7% per year   What's the most you can withdraw if t...

A: Amount =100000 interest rate=7% Total withdrawal =9 (zero at end) Present value FACTOR =1-(1+r)-n/r ...

Q: ABC Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net ...

A: Click to see the answer

Q: FFC is trying to establish its optimal capital structure. Its current capital structure consists of ...

A: The CAPM is a model that helps to compute the return on equity with the help of beta and risk-free r...

Q: At issue, coupon bonds typically sell A. above par value. B. at or near par value. C. at a value un...

A: At issue, coupon bonds typically sell at or near par value.

Q: A portfolio that combines the risk-free asset and the market portfolio has an expected return of 6.2...

A: Formula for expected return is: E(r) = Rf + Beta(Rm - Rf)

Q: Homework Throughout the 1990s, the equity premium fell considerably especially in the USA. One conce...

A: Required rate of return is the rate of return which an investor expects to be generated from the amo...

Q: 5) see picture

A: Formula for stock value per share: Stock value per share = Market value of company/No of shares outs...

Q: Mavis Wanczyk (53) of Chicopee, MA was the sole winner of the $758.7 million Powerball jackpot on Au...

A: To compare the upfront payments with the annuity payment option.

Q: If a typical firm reports P20million of retained earnings on its balance sheet, could its directors ...

A: The dividend can be distributed from the profits earned by an entity during a year. An organization ...

Q: A large bakery buys sugar in 50-kg bags. The bakery uses an average of 1,344 bags a year. Preparing ...

A: a)  Economic order quantity =        

Q: If financial managers are to achieve corporate goals, they require well-developed financial markets ...

A: Informational efficiency of financial markets refers to the markets capacity to generate prices that...

Q: 7. Calculating finance charges using the discount method and APRon a single-payment loan You a...

A: financial charge =p×r×tloan disbursed = principal - financial charge APR=FINANCE CHARGEPRINCIPALN