Determine the price of the bond with annual coupons

Assignment Help Financial Econometrics
Reference no: EM13335733

Consider a callable bond with annual coupons, a face value of $1000, and a 20yr term. The coupon rate is an annual rate of 7%, the yield rate is annual rate of 7.25%. The bond may be called at any coupon date (after coupon payment has been made) at times t=14 through t=20. If the bond is called at t=14, 15, or 16, the redemption value is $970. If the bond is called at t= 17, or 18 the redemption values is $995. If the bond is called at t= 19, or 20, the redemption value is $1000. The price of the bond is set to be the minimum price from the various redemption scenarios. Find the price of the bond.

Reference no: EM13335733

Questions Cloud

Determine the redemption value compounded monthly : Face value of a bond with monthly coupons is $1000. The coupon rate is a nominal annual rate of 4.8% compounded monthly. The yield rate is a nominal annual rate of 3.6% compounded monthly.
Determine the capital gain from the sale of the bond : After the 24th coupon payment, the bond is sold at market price. The market yield rate at the time of sale is a nominal annual rate of interest of 6.6% compounded monthly.
What is its speed when it is farthest from the sun : Halley's comet moves about the Sun in an elliptical orbit, with its closest approach to the Sun being 0.59 A.U. what is its speed when it is farthest from the Sun
What is real gdp for 2009 and 2013 : What is nominal GDP for 2009 and 2013 b. What is real GDP for 2009 and 2013
Determine the price of the bond with annual coupons : Consider a callable bond with annual coupons, a face value of $1000, and a 20yr term. The coupon rate is an annual rate of 7%, the yield rate is annual rate of 7.25%.
Explain the enthalopy of cumbustion benzoic acid : The enthalopy of cumbustion benzoic acid C6H5COOh is commonly used as the standered for calibrating constant volume bomb calorimeters.
Find the frequency of its fundamental mode of vibration : A piano tuner stretches a steel piano wire with a tension of 830N . The wire is 0.400m long and has a mass of 3.10g. What is the frequency of its fundamental mode of vibration
Determine the time weighted rate of return : Consider the following transactions. On 1/1 the balance is 220,000. On 4/1 the balance is 215,00, and deposit is made of $20,000. On 6/1, the blance is $242,000 and a withdrawl of an unknown value (X) is made.
Calculate the price below which the firm will not produce : Calculate the price below which the firm will not produce any output in the short run.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Find the probability that her age will be less than 35 years

The age of a group of 50 women are approximately normally distributed with a mean of 48 years and a standard deviation of 5 years. One woman is randomly selected from the group and her age is observed.

  How many years do the bonds have left until they mature

Martin Software has 10.0 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.8 percent of par.

  Determine what will be the rate of return on the bond

A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $106 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year

  What strategies can implement to create a positive outcome

The Fed is scheduled to meet in one week to assess economic conditions and set monetary policy. Economic growth has been high, but inflation has also increased from 3 percent to 5 percent (annualized) over the last four months.

  Calculate the net present value of project to the company

Timo Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $144,980 and have an estimated useful life of 9 years. It believes it can sell the exhibit for $72,400 at that time.

  Should project be accepted based on the discounting approach

Blue Water Systems is analyzing a project with the following cash flows. Should this project be accepted based on the discounting approach to the modified internal rate of return if the discount rate is 14 percent

  What is the par value and current interest payment of tips

A 3.625 percent TIPS has an original reference CPI of 184.7. If the current CPI is 210.0, what is the par value and current interest payment of the TIPS

  Determine what is the cash flow to stockholders during 2014

Weiland Co. shows the following information on its 2014 income statement: sales = $157,000; costs = $81,100; other expenses = $4,400; depreciation expense = $10,100; interest expense = $7,600; taxes = $18,830; dividends = $7,600.

  How long should owner wait to save the entire amount

A restaurant owner wants to buy new kitchen equipment for $25,000. He would like to pay for it through saving up $2,000 a week in a fund that pays 10% interest compounded monthly.

  How many shares of each company should you purchase

Best Buy at $50.00, and Ford Motor at $10.00. How many shares of each company should you purchase so that your portfolio consists of 25 percent Alaska Air, 40 percent Best Buy, and 35 percent Ford Motor

  How much interest is included in the first months payment

Consider a 30-year mortgage at an interest rate of 9% compounded monthly with a $1300 monthly payment. How much interest is included in the first month's payment

  What will the after-tax cost of debt be when the loan is due

Tobin's BBQ has a bank loan at 8% interest and an after-tax cost of debt of 6%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%

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