A bond will pay $70 of interest at the end of each of the next three years, plus $1,000 at the end of year three. If the present market price is $1,040, its yield-to-maturity is: (a) 5.5%. (b) 4.9%. (c) 6.4%. (d) 6.8%. (e) 7.4%.

(a) 5.5%

Explanation:

Yield-to-maturity (YTM) is the discounting rate for calculating the present value of bond & coupon received.

Bond price = Present value of interest received + present value of bond

⇔ 1040 = 70/(1+ YTM)^3+70/(1+ YTM)^2+70/(1+ YTM) + 1000/(1+YTM)3

It's really difficult to solve above equalation, then we try every hint provived.

(a) 5.5% ->True

70/(1+ 5.5%)^3+70/(1+ 5.5%)^2+70/(1+ 5.5%) + 1000/(1+5.5%)^3 = 1040

(b) 4.9%

70/(1+ 4.9%)^3+70/(1+ 4.9%)^2+70/(1+ 4.9%) + 1000/(1+4.9%)^3 = 1057

(c) 6.4%

70/(1+ 6.4%)^3+70/(1+ 6.4%)^2+70/(1+ 6.4%) + 1000/(1+6.4%)^3 = 1016

(d) 6.8%

70/(1+ 6.8%)^3+70/(1+ 6.8%)^2+70/(1+ 6.8%) + 1000/(1+6.8%)^3 = 1005

(e) 7.4%.

70/(1+ 7.4%)^3+70/(1+ 7.4%)^2+70/(1+ 7.4%) + 1000/(1+7.4%)^3 = 990

a) 5.5 %

Explanation:

Given FV = $1000, P = $1040, n = 3 YAERS, C = $70, YTM = ?

YTM Formula

= C+F-P/n÷F+P/2

=70+1000-1040/3÷1000+1040/2

=5.5%

statement of owner's equity;

ans.

heterothermic organisms include those organisms that can switch between homeothermic (having body temperature higher than environment) and poikilothermic (having variation in internal body temperature) strategies.

some migratory birds show heterothermy as they decrease their metabolic rate during cold nights to keep their body temperature low. drop in metabolic rate allows increase in production efficiency of birds that reduces the internal body temperature to make it equal to external cold temperature during cold nights.

thus, the correct answer is 'birds allow their temperature drop in order to increase their production efficiency.'