Effects of the changes of market interest rate

Assignment Help Finance Basics
Reference no: EM132618671

Consider two bonds X and Y. The coupon rates are 10% and the face values are TK.maturity. 2000 for both bonds. Bond X has 12 years maturity while bond Y has 10 years to

a. What are the prices of the two bonds if the market interest rate for both bonds is 10%

b. If the market interest rate increases to 14%, what will be the prices of the two bonds?

c. If the market interest rate decreases to 9%, what will be the prices of the two bonds?

Describe the effects of the changes of market interest rate on the values of the two bonds.

Reference no: EM132618671

Questions Cloud

What the risk is of estimating the wacc lower than a company : What the risk is of estimating the WACC lower than a company's actual WACC and the risk of estimating the WACC higher than the actual WACC.
Define evidenced based practice and the evolution of ebp : Concisely define evidenced based practice, the evolution of EBP and how barriers to EBP can be overcome. Briefly give an example of a compelling clinical.
Explain brennen inc will clear of borrowing only for mon th : Brennen, Inc.will be clear of borrowing only for the months of September, October and November. The CEO is concerned that the company is not profitable. Explain
What is the yield : Assume an investor purchased six-month commercial paper with face value $2 millionfor $ 890,000. What is the yield?
Effects of the changes of market interest rate : Describe the effects of the changes of market interest rate on the values of the two bonds.
How another characteristic would change your response : An 83-year-old resident of a skilled nursing facility presents to the emergency department with generalized edema of extremities and abdomen.
What is clients financial needs analysis : What is clients financial needs analysis and why it is revelant?
Analyze different approaches to innovation : Analyze the different approaches to innovation discussed in this chapter to determine which approach
What is the weighted average cost of capital : In optimal capital allocation process the company capital budgeting is the most determinate factor. Leveraged company always considers

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the incremental cost of going outside

What is the incremental cost of going outside versus conducting the survey as in the past?

  What is the total investment return for a u.s. investor

If the Swiss franc depreciates by 4% with respect to the U.S. dollar and a Swiss stock provides a 5% return in local terms, what is the total investment return for a U.S. investor?

  What is the after tax cost of preferred stock

Flotation costs for new insurances of preferred stock are 4.5% of the stock value. What is the after tax cost of preferred stock if the firm's tax rate is 30%

  What is portfolio return

The monthly returns for Company G, Company S, and Company N were 7.55 percent, -1.53 percent, and -.20 percent. What is your portfolio return?

  What is the nominal rate of return per year on an investment

What is the nominal rate of return per year on an investment that increases in value by 8% every 3 months? What is the amount of the unrecovered balance immediately after you make the third payment?

  Defining the margin percentage in account

Suppose you purchase 100 shares of a stock on January 1st for $50/share with $3000 of your own money and $2000 borrowed from your broker at 6%.

  Charge on a mortgage to achieve an equivalent return

What interest rate (compounding quarterly) should you charge on a mortgage to achieve an equivalent return?

  What is the project payback

What is the project's payback? Round your answer to two decimal places.

  Why are semiannual periods used in discounting

List the four inputs needed to value a bond ? When valuing a zero-coupon bond, why are semiannual periods used in discounting? Describe the relationship between the price of a bond and the yield to maturity of the bond.

  Compute earnings per share for the given year

Sosa Diet Supplements had earnings after taxes of $640,000 in 20X1 with 375,000 shares of stock outstanding. On January 1, 20X2, the firm issued 100,000.

  Calculate the age of your son

Suppose you plan to start saving for your son's college education. He will begin college when he turns eighteen years old and will need $4,000 at that time and in each of the following three years.

  Company hta had free cash flow for firm fcff of 1500000

company hta had a free cash flow for the firm fcff of 1500000 last year. it is expected the fcff will keep a

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