Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 12 percent, has a YTM of 10 percent, and has 16 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 10 percent, has a YTM of 12 percent, and also has 16 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today?

Price of x bond = $1158.02  

Price of y bond  = $1000

Explanation:

given data

bonds value = $1,000 par value

x bond

coupon rate = 12 percent = 0.12

YTM = 10 percent = 0.10 = 0.05 semi annual

maturity = 16 years = 32 semi annual

y bond

coupon rate = 10 percent = 0.10

YTM = 12 percent = 0.12 = 0.06 semi annual

maturity = 16 years  = 32 semi annual

solution

For x bond

first we get here semi annual coupon payment that is express as

semi annual payment = bonds value × coupon rate × time period   .........1

semi annual payment = $1000 × 0.12 × 0.5

semi annual payment = $60

and

Price of bond will be

Price of bond = semi annual payment ×       ..........................2

put here value and we get

Price of bond = 60 ×  

Price of bond = $1158.02  

and

For y  bond

semi annual payment = bonds value × coupon rate × time period   .........3

semi annual payment = $1000 × 0.10 × 0.5

semi annual payment = $50

and

Price of bond will be

Price of bond = semi annual payment ×       ..........................4

put here value and we get

Price of bond = 50 ×  

Price of bond  = $1000

answer: technology

hope i

-lavira: )

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.