Bond pays interest on semi-annual basis

Assignment Help Financial Management
Reference no: EM131878218

1. You are about to purchase a 20-year bond, ($1,000 face value) with 2% annual coupons. If the current market rate is 4%, at what price should you be willing to buy this bond, assuming that this bond pays interest on a semi-annual basis?

2. You are about to purchase a 15-year bond, ($1,000 face value) with 3 % annual coupon. If The current market rate is 4%, at what price should you be willing to buy this bond? Assuming that this bond pays interest on a semi-annual basis?

Reference no: EM131878218

Questions Cloud

Lowest direct issue costs as percentage of gross proceeds : Which type of offering will generally incur the lowest direct issue costs as a percentage of gross proceeds?
Primary insurer has small portfolio of only two policies : A primary insurer has a small portfolio of only two policies. Policy 1 has a face value of 80, and last year there were losses of 30 and 60.
Characteristics is least applicable to term loans : The basic assumption of the ABC approach to inventory management is that. Which one of these characteristics is least applicable to term loans?
Determine the value of forward contract for this transaction : Determine the value of a forward contract for this transaction in US$ using present value discounting
Bond pays interest on semi-annual basis : what price should you be willing to buy this bond, assuming that this bond pays interest on a semi-annual basis?
Ultimate control of the assets of publicly-traded company : Who has the ultimate control of the assets of a publicly-traded company like BNJ? Is it the Board? Stockholders? Creditors?
Always maintain constant growth rate in its dividends : If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
Butterfly spread is purchase of one call at exercise price : A butterfly spread is the purchase of one call at exercise price X1, the sale of two calls at exercise price X2 and purchase of one call at exercise price X3
Company weighted average cost of capital : CCC tax rate is 34% and the company’s weighted average cost of capital is 12 percent.

Reviews

Write a Review

Financial Management Questions & Answers

  Nonproduction expenses such as marketing

Nonproduction expenses such as marketing, research and development, and general administrative costs can play an important role in a company's ability to meet long-term goals. Discuss how the budgets for each of these costs contribute to the company'..

  What is kinstons pre-tax cost of debt and preferred stock

What is kinston's pre-tax cost of debt? What is kinston's cost of preferred stock? What is kinston's cost of equity. What is kinston's capital structure weight of the preferred stock?

  Corporate bonds make coupon payments semiannually

Even though most corporate bonds in United States make coupon payments semiannually, If yield to maturity is 9 percent, what is the current price of the bond?

  Determine the payback period for each machine

Payback comparisons: Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternative ones. Determine the payback period for each machine. Comment on the accep..

  Maximize the firms value by financing only with debt

Maximize the firm's value by financing only with debt. Maximize the firm's value by taking on as much debt as possible. Minimize the firm's value by taking on as much debt as possible. Maximize the firm's value by taking on as much equity as possible..

  What are the potential downsides to the brand

Describe a cause-related marketing campaign/ effort with which you are familiar. What are the potential downsides to the brand?

  Dividend is expected to grow at constant rate

Holtzman Clothiers' stock currently sells for $27 a share. It just paid a dividend of $1.25 a share (i.e., D0 = $1.25). The dividend is expected to grow at a constant rate of 9% a year. What stock price is expected 1 year from now? What is the requir..

  The firm has no preferred stock on its balance sheet

The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects.

  Operating income is not affected

Operating income is not affected by: a. depreciation b. cost of goods sold c. rent payments d. interest earned advantages of the corporation form of business include:

  Return on equity will be constant

Suppose investors in Nike have a 12.5% cost of equity. Based on Analysts’ forecasts you expect Nike to have earnings per share of $2.40 in one year and earnings per share of $2.70 in two years. After two years you expect return on equity (ROE) to be ..

  About the profits he earns trading delta stock

Your best friend works in the finance office of the Delta Corporation. You are aware that this friend trades Delta stock based on information he overhears in the office. You know that this information is not known to the general public. Your friend c..

  What is the breakeven stock price for this call buyer

What is the breakeven stock price for this call buyer with regard to profit at expiration?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd