User Account

All Pages

Rate of return on the bond

Assignment Help Finance Basics
Reference no: EM131702874

Perpetual bond, which is also known as a perpetual or just a perp, is a bond with no maturity date. Issuers pay coupons on perpetual bonds forever, and they do not have to redeem the principal. Perpetual bond cash flows are, therefore, those of a perpetuity.

A perpetual bond pays coupons of 4% every year on a face value of $1,000. The rate of return on the bond is 9.30% every year. What is the price of the bond?

Hint: Use the perpetuity formula. Remember the rate of discount and rate of return are one and the same thing.

Reference no: EM131702874

Questions Cloud

Is profiling justified in order to combat terror : What is your opinion? Is profiling justified in order to combat terror, and it so, under what circumstances?
Benefits of eliminating the longstanding policy : What are the benefits of eliminating the longstanding policy at Matsushita that different divisions should be allowed to develop the same basic product?
Write a formula for computing the materialism scale score : Look at the Online Survey Draft. What are the variables (Nominal, Ordinal, Interval, Ratio) for each of the following measures?
One way of relating sociocultural theory : One way of relating sociocultural theory to your life is to think of the bridges you have crossed to get where you are.
Rate of return on the bond : A perpetual bond pays coupons of 4% every year on a face value of $1,000. The rate of return on the bond is 9.30% every year. What is the price of the bond?
Communicating your needs to your support network : Unit IV has focused on ways that you can become a better student through understanding the assignment; communicating your needs to your support network;
Cost of performing inspection sampling moves inversely : The cost of performing inspection sampling moves inversely to the cost of quality failures.
What is the payback period for project : This is to result in additional cash flow of 1,255,000 million over the next 7 years. What is the payback period for this project? Their acceptance period.
What about mary facing the possibility of being terminated : What is the ethical thing for Mary to do? Is is the same action the law requires? What about Mary facing the possibility of being terminated?

Reviews

Write a Review

Finance Basics Questions & Answers

  Megacapital co generates 5 per share in earnings and it has

megacapital co. generates 5 per share in earnings and it has 1000000 shares outstanding. since megacapital has no

  Compute the cost of capital for the project

Compute the cost of capital for the project

  Digby plans to spend an additional

Digby's turnover rate for this year is 6.31%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Digby plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base..

  Show that the ex-dividend value of hema equity is consistent

Show that the ex-dividend value of Hema’s equity is consistent with the binomial model. What is the Δ of the equity, when viewed as a call option on the firm’s assets?

  Treasury bonds which pay semi-annual coupons

Consider 3 Treasury bonds which pay semi-annual coupons. Bond A has 5 years remaining to maturity and a coupon rate of 10%. Bond B has 20 years remaining to maturity and a coupon rate of 10%, and Bond C has 20 years remaining to maturity and a cou..

  When does a derivative security qualify for hedge

when does a derivative security qualify for hedge accounting under sfas

  What is the banc one problem

How should Banc One manage its interest rate exposure and what role do derivatives play in its interest-rate risk management?Hint:

  Case study-the financial detective 2005

Case Study: The Financial Detective 2005 by Sean Carr under the direction of Robert F. Bruner for The University of Virginia Darden school Foundation.

  Eps and capital structure

Supposing the organization makes decisions considering how best to maximize shareholder wealth, at what debt ratio will this objective be realized?

  Consider the factors used to analyze and compute the npv of

consider the factors used to analyze and compute the npv of newproject. the text says if the return is positive we

  What is the sustainable growth rate

What is the sustainable growth rate

  A estimate the value of nabor industriesentire company by

the firms weighted average cost of capital is 11 and has a 1500000 of debt at market value and 400000 of preferred

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd