Find the total return on this bond in us dollars

Assignment Help Financial Management
Reference no: EM131998026

Letticia? Garcia, an aggressive bond? investor, is currently thinking about investing in a foreign? (non-dollar-denominated) government bond. In? particular, she's looking at a Swiss government bond that matures in 15 years and carries a 9.62?% coupon. The bond has a par value of 6,000 Swiss francs? (CHF) and is currently trading at 112.67 (i.e., at 112.67?%of? par).Letticia plans to hold the bond for a period of 1? year, at which time she thinks it will be trading at 118.73 long dash—?she's anticipating a sharp decline in Swiss interest? rates, which explains why she expects bond prices to move up. The current exchange rate is 1.58 ?CHF/U.S. $, but she expects that to fall to 1.23 CHF/U.S. $. Use the foreign investment total return formula to find the information below.

a. Ignoring the currency? effect, find the? bond's total return? (in its local? currency).

b. Now find the total return on this bond in U.S.dollars. Did currency exchange rates affect the return in any? way? Do you think this bond would make a good? investment? Explain.

Reference no: EM131998026

Questions Cloud

Find the bond investment value of this ?issue : Find the bond investment value of this ?issue, given that comparable nonconvertible bonds are currently selling to yield 9.16?%.
What is the intrinsic value of a share of xyrong stock : What is the intrinsic value of a share of Xyrong stock? What is your expected one-year holding-period return on Xyrong stock?
Calculate the price with the constant dividend growth model : Calculate the price with the constant dividend growth model. What is the present value of its growth opportunities?
Compare your firm beta to the industry average beta : Compare your firm's beta to the industry average beta.
Find the total return on this bond in us dollars : Now find the total return on this bond in U.S.dollars. Did currency exchange rates affect the return in any? way?
What is the intrinsic value of deployment specialists stock : If the required return for Deployment Specialists is 10.0%, what is the intrinsic value of Deployment Specialists stock?
Options contracts on stocks may : Options contracts on stocks may.
The total return as a percentage of the initial investment : The total return as a percentage of the initial investment is?
Coupon bonds on the market : Staind, Inc., has 11 percent coupon bonds on the market that have 9 years left to maturity.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the unappropriated-retained earnings amount

what is the unappropriated, retained earnings amount and how do you calculate it? Please show steps.

  Most valuable prize-the greatest present value

You can choose any one of the following prizes. If your discount rate is 10% (annual compounding), which is the most valuable prize, i.e. has the greatest present value?

  Firm weighted average cost of capital

Wayco Industrial Supply has a pre-tax cost of debt of 7.6 percent, a cost of equity 14.3 percent, and a cost of preferred stock of 8.5 percent. The company's tax rate is 37 percent. What is the firm's weighted average cost of capital?

  Severe abdominal pain and placed in an intensive care unit

Janine was hospitalized with severe abdominal pain and placed in an intensive care unit. Her doctor told the hospital personnel to order around-the-clock nursing care for Janine.  In view of the fact that no express contract was ever formed, can Nurs..

  What do you think ex-dividend price will be

What do you think the ex-dividend price will be?

  The minimum lenders typically require for a dcr in office

Suppose the market yield on mortgages is 9.0% in bond equivalent terms (BEY, or "coupon equivalent", CEY). For the situation described in the problem above (i.e., where the BEY is 9.0%), what is the "mortgage equivalent" yield, or the "nominal" annua..

  Insurance wants to sell you an annuity

Atlas Insurance wants to sell you an annuity which will pay you $550 per quarter for 20 years.

  Market expected return-risk-free rate

A stock has an expected return of 11 percent, its beta is .85, and the risk-free rate is 5.5 percent. What must the expected return on the market be?

  What is the aftertax cash flow from the sale of this asset

Consider an asset that costs $730,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $192,000. If the relevant tax rate is 40..

  Fixed costs-revent revenue and variable costs

You are tasked to identify the break-even point for property A and Property B. Use Q=fixed costs/Revent Revenue-Variable costs.

  End-of-the-year after-tax cash inflows

he project will produce the following end-of-the-year after-tax cash inflows of

  Calculate the gross earning for an apple picker

Calculate the gross earning for an apple picker based on the following differential pay scale: (Round your answer to the nearest cent.) 1-1,000:$0.03 each 1,001 - 1,600 ; $0.05 each over 1,600 : $0.07 each apple picker rice number of apples picked 1,..

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