Maximum value that you are willing to pay for bond

Assignment Help Financial Management

Reference no: EM131905326

1. Suppose you plan to buy a 5 year $1000 bond with an annual coupon rate of 7%. If the discount rate is 7%, what is the maximum value that you are willing to pay for this bond? Answer the same question if the discount rate is 6% and 8%. Show all work.

2. An investor buys a $1000, 30 year, with 5% coupon, bond at par. After five years have passed, interest rates are 8.5%. What would be the new price of this bond? Show all work.

Reference no: EM131905326

Questions Cloud

What is required rate of return : What is the required rate of return? What stock price is expected 1 year from now?

Palmer minimum costs of ordering and holding inventory : The firm carrying cost is 20 percent of the inventory value, at cost. what is Palmer’s minimum costs of ordering and holding inventory?

What is pretax required return on gordon stock : If the aftertax expected returns on the two stocks are equal (because they are in the same risk class), what is the pretax required return on Gordon’s stock?

What is the stock value per share : If Scampini has 50 million shares of stock outstanding, what is the stock's value per share?

Maximum value that you are willing to pay for bond : what is the maximum value that you are willing to pay for this bond?

Constant rate is stock expected to grow after year : At what constant rate is the stock expected to grow after Year 3?

What is the firm horizon or continuing and value : How far away is the horizon date? What is the firm's horizon, or continuing, value? What is the firm's intrinsic value today, P0?

Considering project that has cash flow and wacc data : Ellmann Systems is considering a project that has the following cash flow and WACC data.

Find the finance charge on bill : The interest on the average daily balance is 1.9% per month. Find the finance charge on the June 5 bill.

User Account

All Pages