Compute and interpret the price and duration of the bond

Assignment Help Financial Management
Reference no: EM131450478

Consider a 3-year government bond with an annual coupon rate of 5%. Assume that the yield to maturity on this bond is 3%. Also assume that coupons are paid annually. Compute and interpret the price of the bond and the duration of the bond.

Reference no: EM131450478

Questions Cloud

Cover the cost of your child college education : What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?
Union pacific is considering issuing commercial paper : Union Pacific is considering issuing commercial paper and would like to know the yield it should offer.
Write a one paragraph reflection on your thoughts : Watch the following video and write a ONE paragraph reflection on your thoughts, questions, insights. Video- The neurons that shaped civilization.
About any kind of financial security for sale : about any kind of financial security for sale in either primary or secondary markets would be continuously and freely available to all participants,
Compute and interpret the price and duration of the bond : Compute and interpret the price of the bond and the duration of the bond.
What is the appropriate discount rate for an expansion : Suppose the stock of CBD Ltd, a manufacture of toys, has a beta of 2.7. The firm is 100-percent equity financed. Assume a risk-free rate of 3-percent.
The current set of spotinterest rates with one : The current set of spotinterest rates with one, two, three and four years to maturity are 4%, 6%, 7% and 7.5% respectively.
Explain the concepts of object orientation methodology : Investigate the effectiveness of business information systems of the given case study. To do this, you are required to submit a complete report.
Do primates have culture or is it only a human quality : Do primates have culture or is it only a human quality? What is an example that supports your response? Be thoughtful and clear in your response.

Reviews

Write a Review

Financial Management Questions & Answers

  Analyze the alternatives and indicate your recommendation

As a representative of the utility company, you are concerned with maximizing the present value of the project. Analyze the alternatives and indicate your recommendation.

  Considering a project with initial outlay

East coast television is considering a project with initial outlay of $X ( you will have to determine this amount) It is expected that the project will produce a positive cash flow of 43,000 a year at the end of each year for the next 17 years. The a..

  About the accounts payable

A chain of appliance stores, APP Corporation, purchases inventory with a net price of $700,000 each day. The company purchases the inventory under the credit terms of 1/15, net 35. APP always takes the discount, but takes the full 15 days to pay its ..

  Describe the feasible and efficient sets of investments

Suppose there are two uncorrelated assets in the market. You may invest in one or any combination of these risky financial assets over the next period. The expected rate of return ¹ is the same for both assets. Show the assets on a mean return-standa..

  What is the amount of the net new borrowing

The balance sheet of a firm shows current liabilities of $56,300 and long-term debt of $289,200 as of last year. What is the amount of the net new borrowing?

  What is the present worth of the interest on investment

Heather puts $8000 on an investment that offers 5% interest per year. The interest is due in 5 years. Annual inflation is expected to be 4% over the next 5 years. Heather’s actual MARR is 7.5%. What is the present worth of the interest on investment?

  Target capitol structure-cost of common equity

Patton Paints Corporation has a target capitol structure of 60% debt and 40% common equity, with no preferred stock. It's before-tax cost of debt is 12% and it's marginal tax rate is 40%. The current stock price is $22.50. The last dividend was D0=$2..

  What weight would you assign to the risk-free asset

You invest $100 in a risky asset with an expected rate of return of 15% and a standard deviation of 15% and a T-bill with a rate of return of 5% and E (U)= E(r) - 0.5Aσ2. Suppose your risk aversion factor is 5. What weight would you assign to the ris..

  Remember interest rate or compounding period on account

Herbert currently has $47335 in a savings account with his local bank, but unfortunately he doesn't remember the interest rate or compounding period on this account. Fortunately, a quick look at his bank's website indicates that all of their savings ..

  Assume semi-annual coupon payments

What is the yield to maturity of a 23-year bond that pays a coupon rate of 8.25% a year, has a $1K par value, and is currently priced at $1, 298.05? Assume semi-annual coupon payments.

  Calculate the metrics of capital budgeting

Identify relevant incremental cash flows - Calculate cost of capital (k-wacc) to use as the discount rate and calculate the metrics of capital budgeting: Net Present Value, Profitability Index,

  Calculate the annual return on the mutual funds

Suppose an individual invests $34,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3.8 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating e..

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