Coupon bond with face value

Assignment Help Financial Management
Reference no: EM131070502

A 5.5 percent coupon bond with face value of $1,000 matures in 7 years , pays interest semi annually and has a yield to maturity of 6.23 percent. What is the current price of the bond? Does your answer Make sense? Why or why not?

Reference no: EM131070502

Questions Cloud

Save each year until retirement to meet your retirement goal : You believe you will spend $30,000 a year for 10 years once you retire in 20 years. If the interest rate is 5% per year, how much must you save each year until retirement to meet your retirement goal? Annual Savings ______ ?
What is the effective annual rate on loan : You’ve borrowed $6,903.71 and agreed to pay back the loan with monthly payments of $270. Assume the interest rate is 15% stated as an APR. How long will it take you to pay back the loan in Number of months? What is the effective annual rate on the lo..
What is the firm market capitalization : A firm has just reported net income of $500 Million for the latest year. In addition, the firm has outstanding 75 Million shares, each one of which currently trades at $60 per share. What is the firm’s EPS? Therefore, what is its PE ratio? What is th..
Requires an initial fixed asset investment : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will have a ..
Coupon bond with face value : A 5.5 percent coupon bond with face value of $1,000 matures in 7 years , pays interest semi annually and has a yield to maturity of 6.23 percent. What is the current price of the bond? Does your answer Make sense? Why or why not?
Aerospace products acquired new multispindle : A manufacturer of aerospace products acquired a new multispindle, multi-turret turning center for $250,000. The machine will generate new revenue of $80,000 per year. Operating costs for the machine will average $10,000 per year. Determine whether th..
Calculating real rates : You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –24.9 percent, 13.6 percent, 30.2 percent, 2.3 percent, and 21.3 percent. The average inflation rate over this period was 3.23 percent and the average T-b..
Use the free cash flow valuation method : Use the free cash flow valuation method to find the value per share for the following firm: A firm has just reported free cash flow to the firm (FCFF) for the last year as having been $65 Million.
Retirement income will decline annually after he retires : Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $45,000 has today. (The real va..

Reviews

Write a Review

Financial Management Questions & Answers

  How the method can be used by the trader

What Fibonacci method can be very helpful to a investment trader in either determining a stop that would allow staying with a major trend, or in finding an entry level for new positions? Explain how the method can be used by the trader.

  Combined communications is firm in rapidly growing intustry

Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 24 percent a year for the next 4 years and then decreasing the growth rate to 6 percent per year. The company just paid ..

  Benchmark for determining projects cost of capital

The corporate cost of capital provides a benchmark for determining a project's cost of capital. In general, projects that are riskier than average must have a cost of capital that is higher than the corporate cost of capital, while projects that are ..

  Diversified portfolio consisting

You hold a diversified portfolio consisting of a $10,000 investment in each of 15 different common stocks (i.e., your total investment is $150,000). The portfolio beta is equal to 1.1. You have decided to sell one of your stocks which has a beta equa..

  What is the clinic degree of operating leverage

Assume that the base case forecast is 10,000 visits. What is the clinic's degree of operating leverage (DOL) at this volume level? Confirm the net incomes at the other volume levels using the DOL combined with the percent changes in volume.

  What will be the increase in total market value for the firm

A consultant has collected the following information regarding Hobbit Manufacturing: Operating income (EBIT) $600 million, Debt $0, Interest expense $0, Tax rate 35%, Cost of equity 7%, WACC 7% . The company has no growth opportunities (g = 0), so th..

  Effective rate of interest

Koopman's Chickens, Inc. plans to borrow $300,000 from its bank for one year. The rate of interest is 10 percent, but a compensating balance of 15 percent is required. What is the effective rate of interest?

  Assuming annual payments-what is the value of the bond

Jane issued five-year bonds that pay a coupon of 6.5 percent semi annually. The current market rate for similar bonds is 5.5 percent. How much will you be willing to pay for Jane's bond today? Jane is issuing a 10-year bond with a coupon rate of 6.76..

  The generation-skipping transfer tax

The generation-skipping transfer tax (GSTT) is in addition to the unified gift and estate tax and is designed to tax large transfers that skip a generation (i.e. from grandparent to grand chile). The purpose of the tax is to collect potentially lost ..

  Financial statements show operating profit

Mattel Inc.’s 2011 financial statements show operating profit before tax of $1,041,101 thousand, net income of $768,508 thousand, provision for income taxes of $202,165 thousand and net non operating expense before tax of $70,428 thousand. Mattel’s s..

  What are arithmetic and geometric average returns for stock

What are the arithmetic and geometric average returns for a stock with annual returns of 21 percent, 9 percent, –2 percent, and 13 percent? List the arithmetic answer first.

  Market capitalization rate

Dolphin Killers Brand Tuna has a market capitalization rate of 10% and plans to make annual dividend payments for the next three years of $1.50, $1.60, and $1.70, with the first dividend to be paid one year from today. After that, the dividends shoul..

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