Compute the total dollar return and three components

Assignment Help Finance Basics
Reference no: EM132660541

Assume the current 10-year yield is 1%. All yields are BEYs.

a) Imagine you just bought a 1% coupon ten-year T-bond, how much you have paid for it? Assume a par of $100. The 1% coupon is paid semi-annually.

b) You plan to hold the bond for ONE year. Assume the yield stays at 1% during the year but goes up to 2.5% the minute before you sell the bond at the end of the year. Compute the total dollar return and its three components (coupon interest, interest on interest, capital gain or loss) for your investment. What is the realized yield (BEY) of your investment?

Reference no: EM132660541

Questions Cloud

Value of the embedded put option to the bondholder : With the term structure flat at 6 percent (EAY), what is the value of the embedded put option to the bondholder? Assume a par value of $1000.
What is the unique niche of the firm investment strategy : Comment on firms' business models and investment strategies: what is the unique niche of this firm's investment strategy? What are the strength and weakness?
Unit sales needed to attain target profit-lin corporation : Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The company's monthly fixed expense is $32
Discuss either two civil liberties or two civil rights : Discuss either two (2) civil liberties or two (2) civil rights events (past or current) that have influenced a sense of social responsibility in the American
Compute the total dollar return and three components : Imagine you just bought a 1% coupon ten-year T-bond, how much you have paid for it? Assume a par of $100. The 1% coupon is paid semi-annually.
What is the difference between data analytics vs data mining : Discussion regarding Data Analytics and Data Mining. What is the difference between Data Analytics vs Data Mining? Provide an example of how each is used.
What is the company margin of safety : Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below:
How responds to the market dynamics previously described : Analyze 1 specific company and describe their business strategy and how it reflects/responds to the market dynamics previously described
What is the value of the embedded put option : With the term structure flat at 6 percent (EAY), what is the value of the embedded put option to the bondholder?

Reviews

Write a Review

Finance Basics Questions & Answers

  What coupon rate must the new bonds offer in order

The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at face value?

  Find the yield to maturity on the bond issue

Use the chart above to answer questions 1-6. Refer to the ratings chart in the slides to find the yield to maturity on the bond issue.

  What is the company cost of preferred stock

Tunney Industries can issue perpetual preferred stock at a price of $74.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

  Design a caregiver marketplace

Design a caregiver marketplace that allows families in need of a caregiver and professional caregivers to connect online.

  Describe labour cost

Describe Labour Cost and how many testers should they use to carry out the testing effort

  Problem-stocks-bonds-hpr-tvm

The future value of an ordinary annuity of $ 3,500 each year for 25 years, deposited at 9% compounded annually is what?

  Considering issuing bonds that will mature

Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of 8 percent. Their par value will be ?$1,000

  How can financial institutions change the size

How can financial institutions change the size and the direction of their repricing gap? Why is it useful to express the repricing gap in terms of a percentage.

  Calculate the required rate of return on ordinary shares

Calculate the required rate of return on ordinary shares of the above two banks using Capital Asset Pricing Model.

  What is the amount of the monthly payments

Finance 330- The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 7.96 percent of the unpaid balance. What is the amount of the monthly payments?

  Convert time series data collected to seasonal indices

Convert time series data collected to seasonal indices. .Use seasonal indices to analyze the inventory data: o Use the slope intercept formula to determine the annual increase in inventory o Provide the monthly seasonal indices for the given data o I..

  You deposit 30000 at the end of each of the next years

you deposit 30000 at the end of each of the next years into your bank. how much money will you have in 5 years later

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