What is maximum price she should be willing to pay for bond

Assignment Help Financial Management

Reference no: EM132018579

Assume that an investor wishes to purchase a 20-year bond with a maturity value of $1,000 and semiannual coupon at an annual rate of 8%. Must show all work and include TVM input keys.

a. If the investor requires a 10 percent simple yield to maturity on this investment, what is the maximum price she should be willing to pay for the bond?

b. Assume that you purchase the bond today but will only hold it for 2 years. You believe that interest yields of similar bonds will go down to 8 percent. At what price you will sell it for in two years?

Reference no: EM132018579

Questions Cloud

Relation between communism and decolonization movements : Discuss the relation between communism and decolonization movements. Discuss the relation between democracy and decolonization movements.

Evaluate the organisational structure of the workplace : MN5F10 – Work- Based Learning - London metropolitan university - Evaluate the organisational structure of the workplace - External and Industry Environment

Research the concept of social judgment theory : Research the concept of Social Judgment Theory, summarize the theory, and explain how this concept plays a role in persuasion.

Organizations disaster recovery and business continuity plan : Write a paper comparing your organization's disaster recovery and business continuity plans with the best practices .

What is maximum price she should be willing to pay for bond : what is the maximum price she should be willing to pay for the bond?

What is the new npv of the project : Incorporating these new values, and the real option, what is the new NPV of the project?

Identify a feature-length film that fits the genre : Identify a feature-length film that fits this genre and provide a basic summary of the movie. As you develop this summary, remember the differences.

What is the option worth today : what is the option worth today if the one year risk free rate is 5%. Use the binomial option pricing model to find this value.

Assess preparedness for an information systems leadership : Assess your preparedness for an information system's leadership and management position based on what you have learned in your graduate degree program.

User Account

All Pages