What is percentage change in the bonds price

Assignment Help Financial Management
Reference no: EM131456550

Consider an eight-year, 13 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 10 percent.

1. What is the price of the bond

2. If the rate of interest increases by 1% what will the bonds new price be?

3. Using your answers to party 1 & 2 what is the percentage change in the bonds price as a result of the 1% increase in interest rates?

4. Repeat parts 2 & 3 assuming a 1% decrease in interest rates, what with the bonds new price be? and what is the percentage change?

Reference no: EM131456550

Questions Cloud

State hypothesis test for the quality control application : A production line operates with a mean filling weight of 16 ounces per container. Overfilling or underlining presents a serious problem and when detected.
What is the maximum dividend per share that firm can pay : What is the maximum dividend per share that the firm can pay? Indicate the effects of an $80,000 cash dividend on stockholders' equity.
What is the p-value and state the hypotheses : At Western University the historical mean of scholarship examination scores for freshman applications is 900. A historical population standard deviation.
Designing database including logical and physical designs : CP5503 Enterprise Database Systems Oracle Assignment. This part provides experience in designing a small database including both logical and physical designs
What is percentage change in the bonds price : what is the percentage change in the bonds price as a result of the 1% increase in interest rates?
Potential problems of poor database design : 1. What are some potential problems of poor database design?
What is the p-value based on the sample of theater : Playbill is a magazine distributed around the country to people attending musicals and other theatrical productions. The mean annual household income.
Large metropolitan trauma hospital : You are the security director for a large metropolitan trauma hospital and need to replace the incumbent security operations supervisor
Specializes in buying deep discount bonds : Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value.

Reviews

Write a Review

Financial Management Questions & Answers

  Estimates the amount of money on deposit

A bank estimates the amount of money on a deposit will be 1 million times the percentage rate of interest. For instance, if they pay 3% they will generate 3 million in deposits. If they can load all teh money they tak in at 10% interest, what interes..

  Describe an optimal inventory policy

Economic Order Quantity. The Trektronics store begins each month with 740 phasers in stock. This stock is depleted each month and reordered. If the carrying cost per phaser is $26 per year and the fixed order cost is $340, what is the total carrying ..

  Fixed rate mortgage to buy new home

You need a 30-year, fixed rate mortgage to buy a new home for $200,000. Your mortgage bank will lend you the money at a 7.5% APR for this 360-month loan. However, you can only afford monthly payments of $1000, so you offer to pay off any remaining lo..

  Equity mutual fund

Rodney Cashman has been investing $2,000 quarterly for the past 18 years in an equity mutual fund. How much is the fund worth now assuming he has earned 11.5% compounded quarterly on his investment?

  Installation cost of machine will be capitalized-depreciated

Your company has spent $500,000 on research to develop a new computer game. The firm is planning to spend $100,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5..

  What is the ratio of debt to total long-term capital

A firm has a long-term debt–equity ratio of 0.55. Shareholders’ equity is $1.4 million. Current assets are $425,000, and total assets are $2.420 million. If the current ratio is 1.7, what is the ratio of debt to total long-term capital?

  Estimate the current cost of capital for petsmart

Estimate the current cost of capital for PetSmart.- Assuming that all of the existing debt gets refinanced at this new rate, estimate the value per share after this transaction.

  Investment satisfies normal distribution with expected value

Assume that the annualized growth rate G of your investments satisfies a normal distribution with an expected value of v=7% and a standard deviation = 20%. What is the probability that you will triple your money after 5 years of investing? After 10 y..

  How much debt is outstanding in a firm

How much debt is outstanding in a firm that has calculated the present value of a perpetual tax shield to be $3,144 if the tax rate is 22.3% and the debt carries a 4.1% rate of return? Show your answer to the nearest $1. Do not use the $ or , signs i..

  How many different nodes and loops are there in the circuit

In given Figure determine which elements are in series, parallel, or neither.- How many different nodes and loops are there in the circuit? Then if v2 = 3 V and v3 = 5 V, find v1, v4, and v5.

  What was the dividend yield

A fund has $177 million dollars of assets, $38 million of liabilities, and 21 million shares outstanding. During the year the fund made dividend distributions of $1.3 per share. What was the dividend yield?

  What is the reward-to-risk ratio in equilibrium

Consider an asset with a beta of 1.2, a risk-free rate of 5%, and a market return of 13%. What is the reward-to-risk ratio in equilibrium? What is the expected return on the asset?

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