Illustrate what will be the amount of your gain or loss

Assignment Help Business Management

Reference no: EM1385284

Q. Two years ago your corporate treasurer purchased for the industry a 20-year bond at its par value of $1,000. The coupon rate on this security is 8 percent. Interest payments are made to bondholders once a year. Currently, bonds of this particular risk class are yielding investors 9 percent. A cash shortage has forced you to instruct your treasurer to liquidate the bond.

a. At illustrate what price will your bond be sold? Assume annual compounding.

b. Illustrate what will be the amount of your gain or loss over the original purchase price?

c. Illustrate what would be the amount of your gain or loss had the treasurer originally purchased a bond with a 4-year rather than a 20-year maturity? (Assume all characteristics of the bonds are identical except their maturity periods.)

d. Illustrate what do we call this type of risk assumed by your corporate treasurer?

Reference no: EM1385284

Questions Cloud

Describe how hr has changed itself from personnel to human : Describe how HR has changed itself from personnel to human resource management. Illustrate what strategic changes did HR make

What is the demand during lead-time : What is the optimal interval (in working days) between orders? What is the demand during lead-time? What is the inventory position immediately after an order has been placed?

Determine concentration of the frozen concentrate : On your break, you prepare orange juice from frozen concentrate that you purchased at the store. Given the directions, you mix the concentrate with three cans of cold water.

Find the vertical tension in wire : A 12.00 box resting on a horizontal, frictionless surface is attached to a 5 weight by a thin, light wire that passes without slippage over a frictionless pulley. The pulley has the shape of a uniform solid disk of mass 2.5 and diameter 0.560.

Illustrate what will be the amount of your gain or loss : Illustrate what will be the amount of your gain or loss over the original purchase price. Illustrate what would be the amount of your gain or loss had the treasurer originally purchased a bond with a 4-year rather than a 20-year maturity.

Find out the magnitude of the doors angular acceleration : A rotating door is made from four rectangular sections, as indicated in the drawing. The mass of each section is 80kg. A person pushes on the outer edge of one section with a force of F = 72N that is directed perpendicular to the section. Find out..

Described in the text as actionable information : described in the text as "actionable information". Is it important to tell the sponsors what they want to hear, or the truth about the actual status of the project? Explain your answer with professional examples if possible

Did the performance change your perception of the poem : Explain how did hearing the text(s) recited aloud compare to a silent reading of it/them? Did the performance in any ways add to or detract from your experience of the text? Did the performance change your perception of the poem or its content in..

Find the same molar amount of glucose : Assume you are creating a solution and the recipe calls for 25 ml of 10 percent glucose. How much of the 3M glucose stock would your need to add to so that you are adding the same molar amount of glucose?

User Account

All Pages