Offered some securities for sale to the public

Assignment Help Financial Management

Reference no: EM131576580

In March 2012, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $1,000 in March 2032, but investors would receive nothing until then. Investors paid DMF $500 for each of these securities; so they gave up $500 in March 2012, for the promise of a $1,000 payment 20 years later.

A. Assuming that you purchased the bond for $500, what rate of return would you earn if you held the bond for 20 years until it matured with a value $1,000? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Rate of Return= 3.53%

B. Suppose under the terms of the bond you could redeem the bond in 2022. DMF agreed to pay an annual interest rate of 1.5 percent until that date. How much would the bond be worth at that time? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Bond Value= $575

C. In 2022, instead of cashing in the bond for its then current value, you decide to hold the bond until it matures in 2032. What annual rate of return will you earn over the last 10 years? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Rate of Return= __________

Reference no: EM131576580

Questions Cloud

What are the current trends in mental health and wellness : What are the current trends in mental health and wellness and how do these trends influence the practice of mental health professionals?

Attention to workplace attitudes : Why is it important for management to pay attention to workplace attitudes?

Explain the modified regula falsi algorithm : Try to find the root x = 1.3333 of the equation (x - 1.3333)3 = 0 to five places of accuracy using the modified regula falsi algorithm and starting.

Effect of workforce diversity on job satisfaction : In Discussion you addressed the effect of workforce diversity on job satisfaction. Now you will continue this topic of job satisfaction in this Assignment.

Offered some securities for sale to the public : In March 2012, Daniela Motor Financing (DMF), offered some securities for sale to the public. What annual rate of return will you earn over the last 10 years?

Explain cognitive mapping and one other memory strategy : Explain cognitive mapping and one other memory strategy of your choosing from the course materials

How the software is legally protected in canada : Perform an ethical analysis and use one of the ethical principles to make a suggestion. How the software is legally protected in Canada.

Statement of cash flows for varney corp : Required: Statement of cash flows for Varney Corp. for the year ended 12/31/2014 using the "indirect" method of presenting operating cash flows

Alternative instead of his mini-van and benefits-cost ratio : Should Jim have purchased the alternative instead of his mini-van? Provide a benefits-cost ratio to support your decision.

User Account

All Pages