Calculate the current price of bond a

Assignment Help Finance Basics
Reference no: EM133113984

A company has two bonds outstanding. Both bonds have a face value of $1,000 and mature in 12 years.

Bond A will be paying coupons semi-annually at the end of each period over the 12-year period. Coupon rate will be 2.50% per year compounded semi-annually. The yield to maturity is 2.00% per year compounded semi-annually.

For bond B, no coupons will be paid during the first four years. During the subsequent five years, coupons will be paid annually at the end of each year. Coupon rate will be 2.50% per year compounded annually. During the last three years, coupons will be paid annually at the end of each year. Coupon rate will be 1.50% per year compounded annually. The yield to maturity is 2.00% per year compounded annually over the entire 12-year period.

a. Calculate the current price of bond A. Show your calculation.

b. Calculate the current price of bond B. Show your calculation.

Reference no: EM133113984

Questions Cloud

What is the post-money value : Fincher Fund II is considering an investment in the B round of Crow Technologies. Crow has 18 million common shares outstanding and has a total stock options po
Money tree investment fund : The Money Tree Investment Fund has a total investment of $450 million in five stocks:
Write the hospital care evolution section : Write a paper about the similarities and differences in hospital care from the 1800s, 1960s, and today, plus your analysis conclusions
What was its net income : Winter Sportswear had return on assets of 9.1%, beginning total assets of $720,000, and ending total assets of $766,000. What was its 20x7 net income
Calculate the current price of bond a : A company has two bonds outstanding. Both bonds have a face value of $1,000 and mature in 12 years.
Fixed amount of money : Your client just turned 25 years old today, and she is planning to retire when she turns 60.
Cost of issuing the shares : Toogood Inc. decided in early 2014 to undergo an IPO. The IPO was intended to raise $10M by floating (i.e. issuing to the public) 1M shares corresponding to 1/2
What are the costs assigned to completed units : What are the costs assigned to completed units when spoilage units are recognized and when they are not recognized in the cost per equivalent unit
What is the percentage change in the? ebt : Camping USA Inc. has been operating for only 2 years in the outskirts of Alburquerque, New Mexico, and is a new manufacturer of a top-of-the-line camping tent.

Reviews

Write a Review

Finance Basics Questions & Answers

  How much did the firm invest in operations

Applying Accounting Relations: Cash Flow Statement (Easy) A firm reported $130 million increase in cash over a year. It also reported $400 million in cash flow.

  Discuss two areas or specific items covered in finance

Discuss two areas or specific items covered in finance that you can foresee going through radical change over the next 10 years

  Calculate the yield to maturity of the bond

The interest payments are made annually. Calculate the yield to maturity of the bond (in euros) if the price of the bond is 106 euros.

  This paper will be a research project that tests a

this paper will be a research project that tests a hypothesis chosen by the student that can relate to the place of

  Determine the maximum price for the smeg

-Determine the maximum price for the SMEG based on the economic value to the customer of the SMEG model.

  Assess the worth of one share

Assess the worth of one share in this company if you require an 11 percent rate of return on similar investments.

  Aspect of using networking

Question 1: A key aspect of using networking as a career tactic is that a person should:

  Facilitate inclusion and cohesion in the team

Recommend what behaviours you will role model to facilitate inclusion and cohesion in the team.

  What is the companys weighted average cost of capital

What is the company's weighted average cost of capital?

  Compute the effective interest rate on the bonds

Compare the market value of the bond investment to its book (balance sheet) value on May 31, 2012, assuming that market interest rates as of that date were 6 percent.

  What is the npv of buying the trucks

If Omair decides to buy the 100 trucks he is estimating that he would be spending MYR 18000 per truck. And the question

  What is the npv of accepting the lockbox agreement

What is the NPV of accepting the lockbox agreement? (Round your answer to 2 decimal places)

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