What are the total return and the current yield

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Question 1 - What is the present value of the following uneven cash flow stream $50, $100, $75, and -$50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually.

Question 2 - Suppose that, on January 1, you deposit $100 in an account that pays a nominal (or quoted) interest rate of 8.125%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later?

A firm issues a 10-year, $1,000 par value bond. The required rate of return is 10%.

Question 3 - What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $878.00? Another bond that sells for $1,134.20? What does a bond selling at a discount or at a premium tell you about the relationship between rd and the bond's coupon rate?

Question 4 - What are the total return, the current yield, and the capital gains yield for the discount bond in Question 3 at $878.00? At $1,134.20? (Assume the bond is held to maturity and the company does not default on the bond.)

Reference no: EM133066255

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