Calculate the actual realized rate of return

Assignment Help Finance Basics
Reference no: EM132459371

An investor pays $800 for a $1000 par bond carrying 5% coupon rate (coupon payments made semi-annually) during a period of economic stress. Over the next few years, she expects the yields to drop to a level at which the value of the bond would increase to $1,200. However, after two years bond yields have risen even higher, so that she is able to sell the bond (at T2, right after the coupon payment) only for $750. Calculate the actual 'realized' rate of return on this investment (expressed as APR2).

Reference no: EM132459371

Questions Cloud

What is the minimum monthly unit sales : What is the minimum monthly unit sales that Steady would require to make it more profitable as a specialty widget manufacturer than it is currently
What was the yield to maturity on the day you bought bond : Home Plc issued a nine year bond in November 2011 with a coupon rate of 8% (face value = £100). In November 2016 (just after that year's coupon
What was the yield to maturity on the day : Home Plc issued a nine year bond in November 2011 with a coupon rate of 8% (face value = £100). In November 2016 (just after that year's coupon had been paid)
What is the cobit framework : What is the COBIT Framework and how will I be able to implement such a framework for my own personal company of 2000 employees?
Calculate the actual realized rate of return : An investor pays $800 for a $1000 par bond carrying 5% coupon rate (coupon payments made semi-annually) during a period of economic stress.
Determine the room rates are the same for one or two guests : Determine the Room rates are the same for one or two guests, however, additional guests must pay an additional amount per person per day for meals
What are monthly mortgage payments : You are deciding to purchase a new condo for $250,000. You plan to pay $50,000 down immediately and need to borrow the rest from your bank with quoted
Future value of an ordinary? annuity : What is the future value of ?$490 per year for 8 years compounded annually at 9percent?
Constructing a two stock portfolio based on the information : You are constructing a two stock portfolio based on the information provided below. What dollar amount will you invest in each stock to achieve the desired

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the npv of the project using single future value

Calculating Costs and Break-Even Night Shades, Inc. (NSI), manufactures biotech sunglasses. Calculate the NPV of the project using the single future value calculated in the previous step and the initial outlay.

  Hudson consideration of the proposal

Which of the costs listed above should be included in Hudson's consideration of the proposal? Why should they be included?

  What is the us dollar denominated return

Currently the stock trades at 130 CHF per share and the exchange rate is now $1.05 per CHF. What is the U.S. dollar denominated return?

  Determine the amount of the monthly payment

In an equipment acquisition proposal, MKBK Enterprises has worked out a deal on the interest rate with the vendor. The equipment is being financed for 10 years.

  What is the horizon value given the company

what is the horizon value given the company has historical growth of 3% and a discount rate of 10%? (answers in $millions)

  Explain systematic risk

Discuss and explain why systematic risk is more closely linked to returns than is unsystematic risk. Which differences are most important to keep in mind when working with each type of risk

  Determine the yield on treasury-note

The one-year Treasury Note has a yield of 2%. It is expected that the same one-year Treasury Note issued one year from now is expected to also yield 2%.

  Portfolio of japanese securities worth

Consider a U.S. investor who owns a portfolio of Japanese securities worth 160 million japanese yen. In order to hedge to currency risk, he considers buying currency puts on yen instead of selling futures contracts. In Philadelphia, a yen put wit..

  Direct labor quantity variance

Calculate the direct labor quantity variance from the information given below.

  What is the price per share

Then dividends are expected to grow at 4% per year forever. If you require a 15% return, what is the price per share?

  What is the modified duration of this bond

A bond has a face value of $1,000 and a coupon rate of 3%. Interest is paid semi-annually. This bond matures in 3 years.

  What are the types of budgets organizations can use

What are the types of budgets organizations can use? How are they different and why would a company choose one type over another?

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