Treasury bond with annual coupon ten years

Assignment Help Financial Management
Reference no: EM131526556

Suppose you purchase a 20-year, $1,000 treasury bond with a 6% annual coupon ten years ago at par. Today the bond's yield to maturity has risen to 8% (EAR). If you sell this bond now, the internal rate of return you will earn on your investment will be closest to:

Reference no: EM131526556

Questions Cloud

What is the coupon rate of bond : The bond pays annual coupons and the next coupon is due in one year. What is the coupon rate of the bond?
What is the price of a share of stock : What is the price of a share of stock if the beta is 2, its next dividend is projected to be $2, and its growth rate is expected to be a constant 4%,
Internal rate of return-modified internal rate of return : Compute the project’s payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return.
Calculate the actual return : Calculate the actual return (also called percentage return) on your investment
Treasury bond with annual coupon ten years : Suppose you purchase a 20-year, $1,000 treasury bond with a 6% annual coupon ten years ago at par.
Growth rate for the next four years : Growing Real Fast Company (GRF) is expected to have a 25 percent growth rate for the next four years
Affect expected interest rates : Suppose that some event takes place which does not affect expected interest rates
Good financial health and was able to get coupon rate : When AFA issued the bonds it was in good financial health and was able to get a coupon rate of 6.6%.
What is the spread on the issue in percentage terms : What is the spread on the issue in percentage terms? what net amount should Trump Card Co. receive?

Reviews

Write a Review

Financial Management Questions & Answers

  Does either tax policy raise social welfare

The country of Adventureland has two citizens, Bill and Ted. - Does either tax policy raise social welfare? - Are either of the policies obviously less than optimal?

  How many blouses needed to be replaced

A buyer discovered that 5% of the merchandise he received was damaged during shipping. The manufacturer agreed to replace the blouses. If he ordered 300 blouses, how many blouses needed to be replaced?

  Investment project-what is the payback period

An investment project costs $21,500 and has annual cash flows of $6500 for 6 years. If the discount rate is 15 percent, what is the payback period?

  Assume the value-weighted index level

You are given the following information concerning two stocks that make up an index. Kirk, Inc. 35,000 shares outstanding, Price per share: $37 Beg of year, $42 End of year. Picard Co. 26,000 shares outstanding, Price per share: $84 Beg of year, $91 ..

  What is the companys cost of equity

The Absolute Zero Co. just issued a dividend of $3.15 per share on its common stock. The company is expected to maintain a constant 6.5 percent growth rate in its dividends indefinitely. If the stock sells for $63 a share, what is the company’s cost ..

  Calculate dividend yield and capital gains yield for year

Turbo Technology Computers is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next two years, at 13% in the third year, and at a constant rate of 6% thereafter. Calculate the dividend yie..

  Compute the price of the bonds based on semiannual analysis

You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 10 percent, which is paid semiannually. The yield to maturity on the bonds 10 percent annual i..

  Using the hotel industry as the larger market

Using the hotel industry as the larger market, specify a niche market and match that niche to a hotel brand that accommodates those customers. Explain your reasoning. The economy plays a critical role in a consumer’s ability to pay for products and s..

  Bond investment problem

Suppose an investor, desiring to earn a higher interest than the average paid by bank on savings, purchases two bonds, say bond A and bond B, and intends to sell them immediately after getting the third coupon payment. The characteristics of the two ..

  What is the initial cost of the project

A project has expected cash inflows, starting with year 1, of $2,200, $2,900, $3,500, and finally in year 4, $4,000. The profitability index is 1.14 and the discount rate is 12 percent. What is the initial cost of the project?

  What would be your investment strategy

Suppose that the six-month spot rate is 6.00% and one-year spot rate is 6.10%. Additionally, suppose that you can look into a crystal ball and know for sure that six months from now that the six-month forward rate will be 6.2%. What would be your inv..

  Compare expected stock returns to the actual annual returns

Compare the expected stock returns to the actual annual returns for each year and determine if the stock was mispriced.

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