A zero bond with a long maturity date

Assignment Help Financial Management

Reference no: EM13724912

A zero bond with a long maturity date has:

A. high price risk, low reinvestment rate risk

B. has neither risk

C. both low reinvestment rate risk and price risk

D. both high reinvestment rate risk and price risk

E. high reinvestment rate risk, low price risk

Reference no: EM13724912

Questions Cloud

Suppose a zero growth stock is expected to pay : Suppose a zero growth stock is expected to pay a $0.5 dividend every quarter and the required return is 5% with quarterly compounding. What is the price?

A firm just paid their annual dividend : A firm just paid their annual dividend of $2.0 a share. They recently announced that all future dividends will be increased by 5% annually. What is one share of this stock worth to you if you require a 15% rate of return?

What is the estimated value of this stock today : A company is expected to pay their first annual dividend 2 years from now. That payment will be $1.50 a share. Starting in Year 3, the company will increase the dividend by 5% per year. The required return from common shareholders is 15%. What is the..

What is the present value of growth opportunities : A company plan to pay a dividend of $5 per share. The growth rate is 7 percent and the discount rate is 12 percent. What is the present value of growth opportunities?

A zero bond with a long maturity date : A zero bond with a long maturity date has:

Compute the present value : Compute the present value of $1,350 paid in three years using the following discount rates: 5 percent in the first year, 6 percent in the second year, and 7 percent in the third year Present Value?

No constant growth valuation : Harrison Clothiers' stock currently sells for $31 a share. It just paid a dividend of $1.5 a share (that is, D0 = 1.5). The dividend is expected to grow at a constant rate of 4% a year. Hart Enterprises recently paid a dividend, D0, of $2.75. It expe..

Why are derivatives important to the financial community : Why are derivatives important to the financial community? Does the government regulate the market? How can there be such a meltdown?

Invested in savings account with nominal interest rate : Money is invested in a savings account with a nominal interest rate of 2.4% convertible monthly for three years. The rate of inflation is 1.5% for the first year, 2.8% for the second year, and 3.4% for the third year. Find the percentage of purchasin..

User Account

All Pages