How much money do you need to invest in zero coupon

Assignment Help Financial Management

Reference no: EM132066327

Question 1. You open the Wall Street Journal and notice a bond with a ten year maturity, 9% coupon rate, annual coupons, and $1000 face value trading for $1,308.87.

(a) What is the yield to maturity of the bond?

(b) If the yield to maturity changed to 7.25%, what would be the price of the bond?

Question 2. You have decided that you want to purchase a house 10 years from now. You expect that you will need $35,000 for a down payment in 10 years. Luckily, you have recently received $45,000 in cash from relatives. If the current annual rates on 10-year, zero-coupon bonds are 1.90%.

(a) how much money do you need to invest in zero coupon bonds today in order to have your $35,000 down payment when you want to purchase the house?

(b) how much money can you spend today?

Reference no: EM132066327

Questions Cloud

Challenges of defining and measuring quality out comes : How can health care organizations address challenges of defining and measuring quality out comes? (cite your sources)

How many spread contracts can you buy : How would you form (i.e., which option would you be long and which option would you be short) a bull call spread with the two options?

Successful continuous quality improvement : What factors are associated with successful Continuous Quality Improvement programs and what are barriers in CQI and what are some recommendations to overcome

Why do you think it is hard to find trustworthy information : Why do you think it is hard to find trustworthy information? What about the worldwide web and Libraries? (200 words) cite your sources

How much money do you need to invest in zero coupon : How much money do you need to invest in zero coupon bonds today in order to have your $35,000 down payment when you want to purchase the house?

What are the biomedical informatics practice areas : 1. What are the biomedical informatics practice areas that enable the informatics techniques and platforms? What roles do these areas play?

Making risk-and quality management decisions : What would you do to change or make it easier? Which information would you say is most overlooked when making risk-and quality management decisions?

Organizations in making important decisions : How are various tools (Pareto chart, check sheet, flow charts, histogram, FEMA etc.) potentially used to represent performance management

Compute the flotation cost adjustment that must be added : Barton Industries expects next year's annual dividend, D1, to be $2.20 and it expects dividends to grow at a constant rate g = 4.9%.

User Account

All Pages