Maturity mortgage-backed bond is issued

Assignment Help Financial Management
Reference no: EM131934056

1. A 10-year maturity mortgage-backed bond is issued. The bond is a zero-coupon bond that promises to pay $10,000 (par) after 10 years. At issue, bond market investors require a 15 percent interest rate on the bond. What is the initial price on the bond? (A)

(A) $2,252

(B) $2,472

(C) $8,696

(D) $10,000

2.  A 25-year maturity mortgage-backed bond is issued. The bond has a par value of $10,000 and promises to pay an 8 percent annual coupon. Assume that 20 years after the bond is issued, bond market investors require a 15 percent interest rate on the bond. What is the market price of the bond? (C)

(A) $6,835

(B) $6,863

(C) $7,653

(D) $14,270

Reference no: EM131934056

Questions Cloud

Is there anything that you can do to hedge your bet : You are an arbitrageur in London. Swiss francs are presently selling in London for U.S. $0.67. You anticipate that they will increase in value and be selling.
Compute the irr on investment : Compute the IRR on this investment.
What are the arguments for and against an index fund : What are the arguments for and against an index fund? Are these arguments stronger or weaker for funds investing in large-cap U.S. stocks, small-cap U.S.
Maintenance margin requirement : If the maintenance margin requirement is 25%, how low can the stock price go in one year before a margin call would be made?
Maturity mortgage-backed bond is issued : A 10-year maturity mortgage-backed bond is issued. What is the initial price on the bond? (A)
What is company balance sheet amount in accounts receivables : The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million.
Calculate the standardized scores : Enter the data set, create the charts, compute the following, and submit the SPSS Output in PDF format only - Calculate the Standardized Scores
Research emerging technology or process innovations : Research emerging technology or process innovations that could be an opportunity for the company and this process.
Determining the managerial planning : When it comes to managerial planning what are the types of plans? Do you think plans with incremental objectives are more effective than those

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the correct net income for hortons for september

Before month-end adjustments are made, the September 30 trial balance of Horton Enterprise contains revenue of $9,200 and expenses of $6,500. Calculate the correct net income for Horton’s for September.

  Required rate of return implied by current market price

The AZ Company currently has $1,000,000 in physical assets that have always generated a steady stream of earnings for the company. The management of the firm has always paid all of its earnings to shareholders as a dividend. What is the required rate..

  What is dividend yield and what is the intrinsic value

ABC Corp. has just paid a dividend of $0.26. ABC has an annual required return of 12%. If dividends are annual and expected to be constant, what is the intrinsic value (fair price) of ABC stock? What is ABC's dividend yield? A different analyst think..

  What does a banks efficiency ratio measure

Depository institutions typically differentiate between interest and noninterest income and expense. What are the primary components of each? Define net interest income (NIM) and burden. What does a bank's efficiency ratio measure?

  Difference in the equations developed for requirements

Scatter Diagrams and High-Low Cost Estimation From April 1 through October 31, Will County Highway Department hires temporary employees to mow and clean the right-of-way along county roads. What factors might have caused the difference in the equatio..

  Applies to individual taxpayers are correct

All of the following statements concerning the AMT as it applies to individual taxpayers are correct, EXCEPT:

  The interest rate on a taxable corporate bond

Suppose that the interest rate on a taxable corporate bond is 5.20 percent and that your marginal tax rate is 32 percent.

  Evaluating board performance

Utilizing workshop readings, the workshop devotional, and your own online research, write a three-page paper, not including your title page and reference page, answering the following questions from the perspective of the Chairman of the Board at a f..

  Prepare the entries using t accounts

Leon Corporation has authorized 400,000 shares of $1 par value common stock, Prepare the entries using T accounts, as necessary, for each of the three dates.

  Compute the required rate of return

A firm pays a $1.50 dividend at the end of year one (D1), has a stock price of $80 (P0), Compute the required rate of return (Ke).

  What is the present value of this investment

You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 8.08 percent, compounded annually. How much is this investment worth today? What is the present value ..

  Determine the annual net cash flows

A lathe costs $30,000 and is expected to have a 7 year life. The lathe will be depreciated straight line over 7 years to an estimated salvage value of $2,000. This machine is expected to reduce the firm’s cash operating costs by $5,500 per year. If t..

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