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A $1000 face value bond was issued at par 20 years ago with 6% coupon paid semiannually. The bond now has seven years remaining to maturity and similar debt obligations are yielding 12%.
Compute the current price of the bond. Assumign that the bond is sold at its current price, what is the capital gain or loss from the original purchase? Now assume that the price of the bond returns to par, what is the percentage capital gain or loss for the new owner? Please explain why the percentage gain is different from the percentage loss.
Assume you are to receive a 10-year annuity with annual payments of $1000. The first payment will be received at the end of Year 1, and the last payment will be received at the end of Year 10. You will invest each payment in an account that pays 9 pe..
What is the price of a bond with the following features? 9 years to maturity, face value of $1000, coupon rate of 3% (annual coupons) and yield to maturity of 9.8% APR.
What is the implied interest rate on a Treasury bond ($100,000, 6% coupon, semiannual payment with 20 years to maturity) futures contract that settled at 100'24?
You are considering two savings options that each provide a rate of return of 4.65 percent. The first option requires annual savings of $2,000, $2,500, and $3,000 over the next three years, respectively, with the first deposit due one year from today..
How are future values affected by changes in interest rates?
The Really Big Weapons Company was asked to bid on the barrel assembly for the 30 mm recoilless rifle. The company estimates that it will take 10 hours to complete the 25th unit, and based on historical data for similar barrel assemblies; an 85-perce..
Lori Koetters was looking at different simple discount notes available to her. She found a note that would cost her $135 in interest at 8% for 60 days. What was the face value?
Essary Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1000, selling at $948. At this price, the bonds yield 5.9%. What must the coupon rate be at on the bonds?
The current price of a non-dividend-paying biotech stock is $140 with a volatility of 25%. The risk-free rate is 4%. For a 3-month time step: What is the percentage up movement? What is the percentage down movement? What is the probability of an up m..
The interest rate in the United States is 4% and the euro is trading at 1 euro per dollar. The euro is expected to depreciate to 1.1 euro per dollar. Calculate the interest rate in Germany.
Adams operates his $25000 firm using his own equity. Bob operates his firm with $12500 of his own money plus $12500 of debt at a cost of 12 percent interest. Calculate Adams's and Bob's return on equity if their respective businesses produce earnings..
Macintosh computers can purchase a piece of equipment that is suspected to yield an 11% return in 10 be financed at 6% with debt. Later in the year the Company said no to the opportunity to purchase a newer machines that would yield a 9% return or co..
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