Estimated market value of the promised payment at maturity

Assignment Help Financial Management

Reference no: EM13937384

A “century” bond has a 6 percent coupon rate and makes semiannual payments ($30 every six months). The yield to maturity is 4 percent and the maturity date is December 11, 2115. You should assume that today is December 11, 2015.

1. What is the estimated market value of the stream of promised coupon payments?

2. What is the estimated market value of the promised payment at maturity?

3. Compute the modified duration of the century bond described above, using the short-cut formula described in Fabozzi.

Reference no: EM13937384

Questions Cloud

Financial ratio is one financial value-measurement expressed : A ratio is one value expressed to another. A financial ratio is one financial value or measurement expressed to another. There are about 20 financial ratios commonly used to assess one company's performance compared to another company in the same ind..

Determining the monetary advantage of investment opportunity : There are several accepted methods of determining the monetary advantage of one investment opportunity over another: The payback method; zero discount rate; net present value; internal rate of return; modified internal rate of return; etc. Discuss on..

Decide to invest in corporate bonds : Suppose you decide to invest in corporate bonds. Accordingly, you visit a bond store. You see 3 bonds on the shelf. One is priced at $1,015.53, another is priced to sell at $1,300.00, and a third is selling at a discounted amount of $876.06.

Portfolio equally invested in risk-free asset and two stock : You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.12 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

Estimated market value of the promised payment at maturity : A “century” bond has a 6 percent coupon rate and makes semiannual payments ($30 every six months). The yield to maturity is 4 percent and the maturity date is December 11, 2115. You should assume that today is December 11, 2015. What is the estimated..

What is the projects IRR : Project k costs $56,312.34, it's expected cash inflows are $12,000 per year for 10 years, and it's WACC is 13%. What is the project's IRR? Round your answer to two decimal places.

What is the payback period for this project : McGilla Golf has decided to sell a new line of golf clubs. The length of this project is seven years. The company has spent $1378859 on research and development for the new clubs. What is the payback period for this project?

Private cemetery business : The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $89,000 for the firm during the first year, and th..

Made at an effective interest rate : Loan of 12500 is made at an effective interest rate of 8.5%. Payments are made at the end of each interest period. Each payment equals twice the interest due until the borrower pays off the outstanding debt with a final payment of at most, 1800. Find..

User Account

All Pages