User Account

All Pages

What are the new present values of these securities

Assignment Help Business Management
Reference no: EM131652050

A 'Dave Problem':

You just purchased three securities, a one-year to maturity Bond, a four-year to maturity bond, and a perpetuity.

The one-year bond promises $1100 on this date next year.

The four-year bond promises annual payments of $100 every year on this date for the next four years and repayment (face value) of $1000 on this date four years from today.

The perpetuity promises $100 per year (on this date) forever.

The interest rate is 10%.

(a) Show the formula for pricing (determining the present value) of each of these bonds using the values given and show the present values.

(b) The interest rate rises from 10% to 20% just after you buy these securities. What are the new present values of these securities?

(c) The interest rate falls from 10% to 5% just after you buy these securities. What are the new present values of these securities?

(d) Calculate the percentage changes in prices for each security between (a) and (b) and (a) and (c).

Reference no: EM131652050

Questions Cloud

Determine the proportion of plywood sheet : Use Excel to determine the proportion of plywood sheets that will meet quality specifications (0.747 to 0.753), given how the current process is performing.
Estimated monthly demand function for avocados : Given an estimated monthly demand function for avocados of Q = 104 - 40p + 20pt + 0.01Y, show how the demand curve shifts as per capita income, Y
Marketing view that known as customer life cycle refers : The new marketing view that's known as the customer life cycle refers to
Determine the percentage of households that have credit card : According to the Federal Reserve Board, the average credit card debt per U.S. household was $8,565 in 2008. Assume that the distribution of credit card debt.
What are the new present values of these securities : The interest rate falls from 10% to 5% just after you buy these securities. What are the new present values of these securities?
Discuss each given studys strengths and weaknesses : Discuss each study's strengths and weaknesses. In light of what you've found in your analyses of these studies, discuss future research needs.
Implement complex loan structures : Assignment Diploma of Finance and Mortgage Broking Management - Design a high-level performance management process for CCF & MB to be rolled out to all staff
Discuss briefly the marketing slogan : The marketing slogan will be "Why Pay for Storage Capacity that You Don't Need?" Based on the data from the study of iPod owners, what percentage of owners.
Marginal benefit and marginal cost of the decision : How would you determine the marginal benefit and marginal cost of the decision? To what extent would you factor the opportunity cost of your decision?

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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