Calculate the yield to maturity of the bond

Assignment Help Financial Management
Reference no: EM13947032

A four-year bond has an 8% coupon rate and a face value of $1,000. If the current price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual interest payments).

Reference no: EM13947032

Questions Cloud

Capital asset pricing model approach to equity valuation : The capital asset pricing model approach to equity valuation:
Calculate the approximate market capitalization : Assume General Electric (GE) has about 10.3 billion shares outstanding and the stock price is $37.10. Also, assume the P/E ratio is about 18.3. Calculate the approximate market capitalization for GE
Compound interest on the unpaid balance : Mr. Bill S. Preston, Esq., purchased a new house for $170,000. He paid $10,000 down and agreed to pay the rest over the next 15 years in 15 equal end-of-year payments plus 11 percent compound interest on the unpaid balance. What will these equal paym..
What is the company projected funds needed : Crum Co’s balance sheet and income statement for 2001 are given below. The firm expects sales to grow by 50% in 2002. Operating costs, spontaneous liabilities and assets will increase in proportion to sales. What is the company’s projected funds need..
Calculate the yield to maturity of the bond : A four-year bond has an 8% coupon rate and a face value of $1,000. If the current price of the bond is $878.31, calculate the yield to maturity of the bond (assuming annual interest payments).
Cash inflow in cash budgeting comes mainly : Cash inflow in cash budgeting comes mainly from: A. Collection on accounts receivable B. Short-term debt C. Issuance of securities D. None of the above
Cash outflow in cash budgeting is mainly due : Cash outflow in cash budgeting is mainly due to: A. Capital expenditures B. Labor costs and other expenditures C. Payments on accounts payable D. Taxes, interest payments and dividend payments
What percentage of the portfolio is invested in stock : Stock A has an expected return of 12% and a standard deviation of 10.5%, and Stock B has an expected return of 20% and a standard deviation of 27.2%. The correlation coefficient between the two stock is -0.2. In order to produce the minimum risk port..
Compensating balances : Compensating balances: A. Are used to finance inventories B. Earn high rates of interest for the firm C. Are ordered monthly (or quarterly) following forecasts based on cash budget analysis to compensate for shortfalls D. Increase the effective inter..

Reviews

Write a Review

Financial Management Questions & Answers

  Why did the us withdraw form the bretton woods system

What conditions will one observe floating exchange rates operating in the gold standard system and explain why the expectation of inflation in country A will lead to a higher nominal rate of interest on securities denominated in A'S currency, but h..

  The grade appeal process at a university requires

The grade appeal process at a university requires that a jury be structured by selecting seven individuals randomly from a pool of 13 students and 13 faculty. What is the probability of selecting a jury of all students? what is the probability of sel..

  Annual percentage increase in winners check over this period

In 1904, the first Putting Green Championship was held. The winner’s prize money was $300. In 2009, the winner’s check was $1,560,000. What was the annual percentage increase in the winner’s check over this period? If the winner’s prize increases at ..

  Call option-position until maturity

Suppose you purchase a call option for $5 and a strike price of $40. On the expiration day, the price of the stock is $55. What is the return on the call option if you hold your position until maturity?

  Reduction in profit contribution from decline in sales

A company is considering shortening its credit period from 30 days to 20 days and believes as a result of its change, its average collection period will decrease from 36 days to 30 days. Bad debt expenses are also expected to decrease from 1.2 percen..

  Two stocks to be correctly priced relative to each other

Stock Y has a beta of 1.35 and an expected return of 14.3 percent. Stock Z has a beta of 0.8 and an expected return of 10.7 percent. Required: What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

  How much would you pay for one of these bonds

If you require a 9 percent return on bonds such as these with 5 years remaining until maturity and 8.2 percent on bonds such as these with 12 years remaining until maturity, how much would you pay for one of these bonds?

  What is the before-tax cost of capital for debt financing

Black Hill Inc. sells $100 million worth of 27-year to maturity 10.81% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $975 for each $1,000 bond. What is the before-tax cost of capital for this debt financing?

  Difference between WACCs using market value and book value

ABC Trucking's balance sheet shows a total of noncallable $35 million long-term debt with a coupon rate of 5.10% and a yield to maturity of 5.20%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights ..

  Global minimum risk portfolio with investment in two stocks

The prices and other information of two stocks in the market are listed in the table: You have $100 of your own money that you are going to invest in the market according to one of two trading strategies. In strategy A, you use margin purchase by bor..

  Economy affects ability to successfully defend sale forecast

Do you think the economy affects the ability to successfully defend a sales forecast? For example, is it more difficult to defend growth in your sales forecast during a recession? Why or why not?

  The inflation-adjusted value of the next interest payment is

Two years ago, an investor purchased a $1,000 par 6% coupon bond that pays interest semi annually. Inflation over the last two years has been 2% per year. the inflation-adjusted value of the next interest payment is ?

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