Corporate bond-expected yield to maturity

Assignment Help Financial Management

Reference no: EM131082755

Five years ago, John purchased a 7% coupon (paid annually), 20-year maturity. $1000 fac value corporate bond for $900. He reinvested the coupons at 5% per year, and just sold off the bond at its prevailing yield to maturity of 10%. Will John have earned his expected yield to maturity Explain using suitable calculations.

Reference no: EM131082755

Questions Cloud

Prepare depreciation schedule for the assets : Prepare a depreciation schedule for the assets in the below transactions using straight line method of depreciation: Calculate any gain or loss and show the appropriate journal entry.

Assume that project being considered has normal cash flows : Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. A project’s NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC..

Calculate the growth rate and P-E ratio : The market capitalization rate for Admiral Motors Company is 9%. Its expected ROE is 15% and its expected EPS is $7. If the firm’s plowback ratio is 40%. Calculate the growth rate and P/E ratio

Firm has current assets that could be sold for book value : A firm has current assets that could be sold for their book value of $32 million. The book value of its fixed assets is $70 million, but they could be sold for $100 million today. The firm has total debt with a book value of $50 million, but interest..

Corporate bond-expected yield to maturity : Five years ago, John purchased a 7% coupon (paid annually), 20-year maturity. $1000 fac value corporate bond for $900. He reinvested the coupons at 5% per year, and just sold off the bond at its prevailing yield to maturity of 10%. Will John have ear..

What is average accounts receivable figure : Skye Flyer, Inc., has weekly credit sales of $18,800, and the average collection period is 51 days. What is the average accounts receivable figure?

Portfolio of the two assets has an expected return : A stock has a beta of 1.2 and an expected return of 10%. The risk free asset currently earns 4%. If a portfolio of the two assets has an expected return of 8%, what is its beta?

Equation to forecast broussards additional funds : AFN equation Broussard Skateboard's sales are expected to increase by 15% from $8.2 million in 2013 to $9.43 million in 2014. Its assets totaled $3 million at the end of 2013. Use the AFN equation to forecast Broussard's additional funds needed for t..

What is the risk reduction of investing in the portfolio : You invest one-third of your wealth in each of three stocks. The expected return and standard deviation of each individual stock is 10 percent and 20 percent, respectively. What is the expected return of the portfolio? What is the risk reduction of ..

User Account

All Pages