User Account

All Pages

What is the current yield of the bond and yield-to-maturity

Assignment Help Financial Management
Reference no: EM13846870

1. The corporate bond of Blue Sky Industrial currently sells at $1,094.00. The bond has an annual coupon rate of 6% and a face value of $1,000. There are 12 years remaining to maturity.

a) What is the current yield of the bond?

b) What is the bond’s yield-to-maturity? (You may show calculator entries here).

c) What is the capital gains yield of the bond? (Show this in two ways if possible ).

2. A bond with 3 years remaining to maturity has an annual coupon rate of 8.5%, and a face value of $1,000. Assume the yield to maturity is 7.00% and answer the questions below. (You may use a financial calculator to get the PV of the bond in this problem – but show your calculator entries, i.e., 1000 FV, etc).

a) What is the duration of this bond?

b) If interest rates fall 0.15% from the given YTM, by what percent will the bond change in value? Show these 2 ways (using modified duration and the capital gains formula method).

Reference no: EM13846870

Questions Cloud

Phineas likes tea and licorice : Phineas likes tea and licorice. He bdrinks two ounces of tea for each ounce of licorice he eats. Tea costs PT per ounce, while licorice costs PL per ounce. If T denotes Phineas' consumption of tea and L denotes his consumption of licorice, write down..
Saving for new tractor and annual interest rate : Charles Hess is saving for a new tractor. The cost is $75,000. How much must he invest at a 4% annual interest rate to have $75,000 in six years? Round to the nearest dollar.
Write a short concise stock recommendation report for a firm : write a short concise stock recommendation report for a firm
What characteristics of this market fit the definition : Identify and describe a real world example of an oligopoly. What characteristics of this market fit the definition of an oligopoly? What role does advertising play in this market? Is this consistent with what you've learned about advertising and olig..
What is the current yield of the bond and yield-to-maturity : The corporate bond of Blue Sky Industrial currently sells at $1,094.00. The bond has an annual coupon rate of 6% and a face value of $1,000. What is the current yield of the bond? A bond with 3 years remaining to maturity has an annual coupon rate of..
Imagine you are working in the dvd rental industry : Imagine you are working in the DVD rental industry and there is a permanent decline in demand DVD rentals. Do you think the price of renting DVDs rise, fall or stay about the same in the long run, ceteris paribus (assume a perfectly competitive marke..
How confident were you in your answer : Please visit this website first and complete the activity:http://www.psychology.iastate.edu/~glwells/stillidentificationtest.html, How confident were you in your answer when you picked the person out of the lineup? Why were you confident/not confide..
Purchase merchandise for resale on credit : Which account below would be credited to record this transaction: purchase merchandise for resale on credit?
Describe methods for changing criminal behavior : What methods and techniques would be useful in a juvenile rehabilitation program to help Tony and do you believe that Tony's family should be part of this treatment? Why or why not?

Reviews

Write a Review

Financial Management Questions & Answers

  Two different bonds currently outstanding

Las Paletas Corporation has two different bonds currently outstanding. Bond M has a face value of $50,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,600 every six months over the subsequent eight years, ..

  What is the dividend yield for each of these three stocks

You will analyze three different stocks, all of which have a required return of 20% and a most recent dividend of $3.50 per share. Stocks A, B, and C are expected to maintain constant growth rates in dividends for the foreseeable future of 12%, 0%, a..

  Calculate payback period and internal rate of return (irr)

Company has an opportunity to make an investment with the estimated after tax cash flows

  What is the value ofthe stock if the required rate of return

A stock just paid an annual dividend of $2. The dividends are expected to grow at 20%per year over each of the next three years and 5% per year thereafter. What is the value ofthe stock if the required rate of return is 12%?

  What will the resulting percentage change in EBIT

The Poseidon Swim company produces swim trunks. The average selling price for one of their swim trunks is $38. The variable cost per unit is $25. Poseidon swim has average fixed costs per year of $35,194.

  Nowc and dcf analysisnbspthe comstock corporation is

nowc and dcf analysisnbspthe comstock corporation is considering investing in a new floor mat manufacturing machine

  Make an assessment of where your company stands right now

Company: Manpower Group IncTicker Symbol: MAN (United States),  Make an assessment of where your company stands right now, what it does well, what it does badly, and what you would change about it.

  Determine the playback and irr-npv

A college student spends $12,000 (end of the year) in year 1, 15,000 in year 2, 16,000 in year 3, and 18,000 in year 4 in order to acquire a college degree. The increase in potential salary (compared to a high school graduate) is expected to be 500 a..

  Calculate the accounting break-even point

We are evaluating a project that costs $836,000. Has an eight-year life and has no salvage value. Assume that depreciation is straight line to zero over the life of the project. Sales are projected at 93,000 units per year. Price per unit is $43, a v..

  What is the new divisor for the price-weighted index

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $48, $400, and $100, respectively. If Baker undergoes a 3-for-2 stock split, what is the new divisor for the price-weighted index?

  What would you forecast the exchange rate

As of March 1, 2015, the exchange rate between the Brazilian real and U.S. dollar is R$3.19/$. Assume that the consensus forecast for the U.S. and Brazil inflation rates for the next 1-year period is 2.0% and 20.0%, respectively. What would you forec..

  What is the standard deviation of returns

A stock has the following year end prices and dividends. What are the arithmetic and geometric average annual returns for the stock over this time period? What is the standard deviation of returns (use the arithmetic average)?

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