Finding the bond value, What was your average annual

Finding the bond value

Reference no: EM1338749

Three years ago (Apr '07) you invested in a mortgage backed bond originally issued in Apr 2000. When it was issued (in 2000), it was sold as a 20-year bond at par with an 8% coupon, and semiannual payments.

a) In Apr 07 (when you bought it), the yield to maturity on this bond was 6%. What was its value at that time ('07)?

b) Unsurprisingly, the yield on this bond skyrocketed to 20% over the next three years, reflecting its current junk bond status. What is it worth now?

c) What was your average annual capital gains yield over the past three years on this bond ('07-'10)? Note: just find the capital gains yield, not the "total" yield.

Reference no: EM1338749

Questions Cloud

Explain the goal of a position paper is to convince audience : Explain The goal of a position paper is to convince the audience that your opinion is valid and worth listening to

Calculating going rate of interest on bonds : Suppose a car company sold an issue of bonds with a 10-year maturity, a $1,000 par value-Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?

Explain donald trumps success : Explain Donald Trumps Success and What obstacles were encountered in the formation and execution of the business

Effect of inflation on purchasing power of bond : ourteen years ago, the U.S. Aluminum Corporation borrowed $9.9 million. To sustain the original $9.9 million purchasing power, how much must the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation).

Finding the bond value : What was your average annual capital gains yield over the past three years on this bond ('07-'10)? Note: just find the capital gains yield, not the "total" yield.

Explain the influence of global trends on a company : Explain the Influence of Global Trends on a Company's Decisions and How does this affect a company's decision to invest in, or divest from, a foreign country

Explain what are the most important parts of a business plan : Explain what are the most important parts of a business plan

Explain enterprise growth- best drivers : Explain Enterprise Growth- Best Drivers and What is more important for enterprise growth

Explain entrepreneurial policy and the essence of pragmatism : Explain Entrepreneurial Policy and The Essence of Pragmatism and Explain how entrepreneurial policy makers can incorporate pragmatic practices into their public policy research.

User Account

All Pages