Two components of the total return or yield

Assignment Help Financial Management

Reference no: EM131841948

You buy a bond today. It has a principal value of $1,000, an annual coupon of 9.5%, and a required yield of 7% (assuming annual compounding). It matures in 15 years. Exactly one year passes. The bond still yields 7% and you sell it for its current price. I hope that you know that the total return you received for the year, is equal to the yield. What I want is for you to tell me the two components of the total return or yield. In this problem, tell me the current yield at t = 15 years. Remember that the "current yield" in NOT simply today's yield. Answer in percent to three decimal places.

Reference no: EM131841948

Questions Cloud

Determinants of interest rates for individual securities : Determinants of Interest Rates for Individual Securities

Different segments of the market for launching this product : A firm has developed a new roofing material that also produces electricity from sunlight. Identify different segments of the market for launching this product.

Finances entirely with common stock : what is the difference between CCC's expected ROE if it financeswith 35% debt versus its expected ROE if it finances entirely with common stock?

What is their common-nonzero and interest rate : Lunus has accumulated 4/3 the amount that Sally has. What is their common, nonzero, interest rate?

Two components of the total return or yield : What I want is for you to tell me the two components of the total return or yield. In this problem, tell me the current yield at t = 15 years.

Equity cost of capital : What is the stock worth today at 7.9 percent equity cost of capital.

What happens to the expected return on stock : If Northern Sludge issues an additional $16 million of common stock and uses this money to retire debt, what happens to the expected return on the stock?

What real amount must you deposit each year to achieve goal : You want to have $3 million in real dollars in an account when you retire in 20 years. What real amount must you deposit each year to achieve your goal?

How much should you be willing to pay for the bond : You are considering a 10-year, $1,000 par value bond. how much should you be willing to pay for the bond?

User Account

All Pages