Contrast a 10-year aaa corporate bond

Assignment Help Finance Basics
Reference no: EM132657517

1) Compare and contrast a 10-year AAA corporate bond with a 10-year Treasury STRIPS. Which would typically offer a higher interest rate? Why? What risk affects both types of bonds? What risk(s) affect only the corporate bond?

2) When we observe interest rates in the financial press, do we see nominal or real rates? Suppose you are 20 years from retirement and are rebalancing the assets in your retirement portfolio. Which rate is more relevant to you? Why?

3) A Treasury STRIPS matures in 10 years and has a yield to maturity of 0.58 percent. If the par value is $100,000, how much would you pay for this STRIPS? What would be the quoted price (e.g., the price reported in the WSJ bond tables)?

4) The current annualized yield on a 2-year STRIPS is 0.13% and the annualized yield on a 3-year STRIPS is 0.15% (WSJ for week ended 7/31/2020). According to the expectations theory of interest rates, what will be the annualized yield on a 1-year STRIPS two years from now? What would you expect to pay for this STRIPS with a $1,000 face value two year from now?

Reference no: EM132657517

Questions Cloud

Calculate the modified duration of bond : A two-year 8% coupon bond that makes annual coupon payments has a face value of 100$ and an (annual) yield to maturity of 3%.
What are consolidation and conversion procedures : What are Consolidation and Conversion procedures?
What is the unit product cost under variable costing : What is the unit product cost under variable costing? Diego Company manufactures one product that is sold for $78 per unit in two geographic
How to audit web server security and implement best practice : Web server auditing can go a long way in enforcing tighter security and ensuring business continuity. The power of log data is tremendous.
Contrast a 10-year aaa corporate bond : Compare and contrast a 10-year AAA corporate bond with a 10-year Treasury STRIPS. Which would typically offer a higher interest rate? Why?
What would be the minimum price that would charge : Assume sales and demand for 2020 are 2,000 units, what would be the minimum price that you would charge if you wanted to make a profit
Develop a disaster recovery plan for an organization : Develop a disaster recovery plan for an organization. There are many different templates available online for you to use as reference and guidance.
What is the value of the cash flows of business : You are planning on opening a restaurant chain. You have projected cash flows of $14 million starting next year (t = 1) with an annual growth rate of 1.5% over
What amount of opportunity cost will the school incur : If the school receives actual sales orders for 785 shirts, what amount of profit will the school earn? What amount of opportunity cost will the school incur?

Reviews

Write a Review

Finance Basics Questions & Answers

  How many of each type bus should be rented for the trip

The large bus rents for $800 and the small bus, $600. How many of each type bus should be rented for the trip for the least possible cost?

  Use multisim and construct the circuit shown

Use Multisim and construct the circuit shown in Figure 1 below.  Measure VB, IE and VC. Check your input signal with the oscilloscope to make sure you have correct amplitude, frequency value and frequency type.

  How will mike and steve be taxed on the distributions

How much gain will Mike recognize on the sale of his stock to Steve?

  What line is described by a regression equation

Write the general form of a regression equation that has a single predictor variable. Identify the criterion variable, the predictor variable, the regression constant, and the regression coefficient.

  What is the dollar amount of the total assets

What is the dollar amount of the total assets in the consolidated balance sheet immediately after the acquisition?

  Importance of employees and information technology

Discuss the importance of employees and information technology in the delivery of service quality. Use two examples of service firms to help support.

  Describe an outright sale of a venture

Describe an outright sale of a venture. What are the four categories of possible buyers?

  What is the payback period of a perpetuity

1. What is the discount factor for a cash flow received in 10 periods if the discount rate is 8%?

  Write a letter announcing a decision not to renew a lease

The lease that T-shirts Plus signed fi ve years ago specifi es that either party can decide not to renew. All that is required is written notifi cation to the other party at least 90 days in advance of the yearly anniversary of the contract date. ..

  Due to growing demand for computer software the perry

due to growing demand for computer software the perry company has had avery successful year and expects its earnings

  Identify tools use in conducting monetary policy

There are several tools that the Federal Reserve can use in conducting monetary policy Identify three of these major tools.

  Calculate the project average accounting return

You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12.7 million.

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