Calculate the bonds rate of return over the year

Assignment Help Financial Management
Reference no: EM132003083

Suppose a bond has a face value of $100, annual coupon payments of $4, a maturity of 5 years, and a price of $90.

a. Write an equation that defines the yeild to maturity on this bond

b. Find the solution for the yield to maturity. (Show steps on done on calculator)

c. Suppose the price of the bond falls from $90 to $85 over a year. Calculate the bond's rate of return over the year

Reference no: EM132003083

Questions Cloud

What is the minimum amount you need to deposit : What is the minimum amount you need to deposit in your account each month in order to reach $5,000 in 20 months?
Should bmi regional lease or buy : What is the NPV(lease-buy) for BMI Regional with this lease rate?Should BMI Regional lease or buy? BMI Regional should .
What was the price of this bond when it was issued : Suppose that Ally Financial Inc. issued a bond with 10 years until? maturity, a face value of $1,000, and a coupon rate of 9% (annual payments).
Analyze the cash flow after taxes : The asset will be depreciated by three-year MACRS. (a) Using the generalized cash flow approach, determine the cash flow after taxes.
Calculate the bonds rate of return over the year : Suppose the price of the bond falls from $90 to $85 over a year. Calculate the bond's rate of return over the year.
How many new shares do you have : If you decide not to exercise your preemptive rights, what is your investment in the firm after the rights offering?
Compare and contrast these two banking products : Factoring and leasing are traditional financial products that are being marketed to corporations. Compare and contrast these two banking products.
Calculate the annual irr of this cash flow stream : Calculate the annual IRR of this cash flow stream. Which is the better deal (Bank or credit Union), and why.
What is the market value of the stock after the rights offer : The market value of the stock is $34 before the rights offering and the new shares are being offered to existing shareholders at a $4 discount.

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate intrinsic value for stock

A stock is currently selling for $45, pays dividend of $1.50. Dividends are expected to grow at constant rate of 7% year. Calculate intrinsic value for stock.

  How much should you be willing to pay for the bond

You are considering buying a bond with a 10 year maturity. The bond’s coupon rate is 8%, and the interest is paid semiannually. If you want to earn an effective interest rate of 8.16%, how much should you be willing to pay for the bond?

  What is the standard deviation of your complete portfolio

In order to have a “complete” portfolio with an expected rate of return of 9.0%, what is the Standard Deviation of your "complete" portfolio?

  Which asset would a risk-averse manager prefer

Assets A B C D Initial investment $15,000 $15,000 $15,000 $15,000 Annual rates of return Pessimistic 8% 5% 3% 11% Most Likely 12% 12% 12% 12% Optimistic 14% 13% 15% 14% Which asset would a Risk-Averse Manager prefer? show me your work that leads to y..

  Term life insurance policy

You buy a $ 10, 000 term life insurance policy. Under a 20-year term life policy, if you die within a twenty-year period from issuance the policy will pay. According to the life tables 95377 of 98437 20 year olds live to be 40. What should you expect..

  What are inherent issues pertaining to dividend purification

Despite the innovative developments in Shariah screening of mixed businesses, some scholars have argued in favour of "purification" as a complementary measure that should go with stock-screening. What are the inherent issues pertaining to dividend pu..

  Uses the accrual method of accounting

Andrews Corporation uses the accrual method of accounting. When it sells the first unit of inventory for its product called Allure during the year, it also matches which of these expenses with that sale:

  Expected to pay the dividends-what is current share price

Far Side Corporation is expected to pay the following dividends over the next four years: $11, $7, $4, and $3. what is the current share price?

  Find the irr for the company project

Deep Waters, Inc. is using the internal rate of return (IRR) when evaluating projects. Find the IRR for the company’s project.

  What must coupon rate be on the bonds

Barnes Enterprises has bonds on the market making annual payments, with 14 years to maturity, a par value of $1,000, and a price of $953. At this price, the bonds yield 9.4 percent. What must the coupon rate be on the bonds?

  Services by offering an after-school program

A not-for-profit childcare center is planning to expand its services by offering an after-school program.

  Specific amount of capital over specific period of time

Which type of fund structure would investment managers be likely to use in order to raise a specific amount of capital over a specific period of time?

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