Determine the price of the bond on september 1-2013

Assignment Help Financial Econometrics

Reference no: EM13332767

On September 1, 2013 Thomas Doniphon purchased a U.S. Government bond having a coupon rate of 4.5 percent, a par value of $1000 and 20 years to maturity. Assuming that the bond makes semiannual coupon payments and is priced to offer investors a semiannually compounded yield to maturity of 5.0 percent.

a. determine the price of the bond on September 1, 2013

b. if the required yield to maturity for the bond increases to 6.0 percent on September 28, 2013 and then remains constant, so that future coupon payments will be reinvested at 6.0 percent compounded semiannually, determine the future amount to which the initial investment will have grown by September 1, 2033 when the bond matures.

Reference no: EM13332767

Questions Cloud

Computerized production control systems : What variables might be used to segment lawnmowere, frozen dinners, dry breakfast cereals, soft drinks, industrial sweepers, photocopiers, computerized production control systems, and car rental agencies?

Determine the angular velocity of the container : Water in a rotating container of radius 50mm is 30 mm lower in the center than at the edge. Find the angular velocity of the container

Determine the initial yearly income that could be provided : Southwestern Mutual Life's actuarial tables indicate that Mr. Lohman has a current life expectancy of 40 years. Assuming that prices are expected to increase steadily at 4.0 percent per year over the next 40 years

Compute is the image real or virtual : consider a system of two lenses. The first lens is a converging lens with a focal length f1=21.4 cm. compute is the image real or virtual

Determine the price of the bond on september 1-2013 : Government bond having a coupon rate of 4.5 percent, a par value of $1000 and 20 years to maturity. Assuming that the bond makes semiannual coupon payments and is priced to offer investors a semiannually compounded yield to maturity of 5.0 percen..

Store is an exponential random variable t : The time (in hours) a customer spends in a particular store is an exponential random variable T, with E[T] = ½

Write a project that calculates the shipping charge : Write a project that calculates the shipping charge for a package if the shipping rate is $0.12 per ounce.

Find the highest-order bright fringe : A screen 1.8 m wide is located 3.6 m from a pair of slits illuminated by 620 nm laser light, Find the highest-order bright fringe that will appear on the screen of the slit spacing is .20 mm

Determine what must the coupon rate be on the bonds : Page Enterprises has bonds on the market making annual payments, with ten years to maturity, and selling for $968. At this price, the bonds yield 6.90 percent. What must the coupon rate be on the bonds

User Account

All Pages