The Difference among expected rate of return and required rate of return

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Answer 1

Question

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

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Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.7 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 5.05 percent. What is the dollar price of the bond?

Answer 2

Question

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

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Answer 3

Question

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

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Answer 4

Question

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

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Answer 5

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

Answer 6

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

Answer 7

Chapter 3, Problem 1DYU

Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

Answer 8

Expert Solution & Answer

Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.