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An cumple of a primary market transaction is Target pending on hown stack from an luvu
An cumple of a primary market transaction is Target pending on hown stack from an luvu. a purchase of Microsoft sted on Nasdaq sale of IBM stock on the NYSE. a news of stock by Ever Solar QUESTION 16 What's the value of a bond that matures in three years, has an areal coupon payment od 5110, and apa who $1,000 Add answer to the nearest $10. $1,330 $330 $970 $1,000
QUESTION 16 What is the value of a bond that matures to three years, has an armul coupon payment of $110, und a pu vaha od 1.posredan und uver to the nearest 510. $1,330 $330 970 51.000
Expert Solution
Question 15:
D. A new issue of stock by Evergreen solar.
Notes:
Primary market transaction is one in which the investors will be able to purchase stocks directly from the issuer.
In the given question , the new issue of stock by Evergreen solar, will be a primary market transaction.
The following willl be secondary market transactions:
Purchase of microsoft stock on Nasdaq.
Sale of IBM stock on the NYSE.
Question 16:
D.$1000.
Value of the bond = {present value of annuity factor * interest payment] + [present value factor * par value]
here,
present value factor = [1-(1+r)^(-n)]/r
here,
r=11% required return =>0.11.
n=3 years.
present value factor = [1-(1.11)^(-3)]/0.11
=>2.44371455.
interest payment = $110.
present value factor = 1/ (1+r)^n
=>1 / (1.11)^3.
=>0.73119138.
par value =$1000.
=> [2.44371455*110] + [0.7311938*$1000]
=>268.808601 + 731.11938
=>$1000.
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