User Account

All Pages

What is the current yield of the bond-financial calculator

Assignment Help Financial Management
Reference no: EM13846743

Instructions: Show all of your work with formulas. For questions with a financial calculator – show your entries, i.e., 1000 FV, 9 i/yr, etc)

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 ).

2. The ABC bond has an annual coupon rate of 7%, pays interest semi-annually and has a face value of $1,000. If there are 27 years to maturity and your required rate of return on bonds of this risk level is 9%, what is the bonds value to you? (With this problem solve for its present value and show all work with the formula).

3. 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 as we did in class; (using modified duration and the capital gains formula method).

Reference no: EM13846743

Questions Cloud

Determine actual implementation of their distribution policy : Which of the following help firms determine the actual implementation of their distribution policy? Which of the following uses is considered a good use of free cash flow? A company invests 15% of its FCF in marketable securities. This makes it diffi..
The russian revolution ended what long standing dynasty : The Russian Revolution ended what long standing dynasty?
Who was heloise''s lover : Who was Heloise's lover and what happens to him after their marriage is discovered?
How many wives did henry viii have : How many wives did Henry VIII have, and what happened to each of them? Place them in order.
What is the current yield of the bond-financial calculator : 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. What is the current yield of the bond? The ABC bond has an annual c..
Explain the social contract as articulated : Explain the Social Contract as articulated by Hobbes, Locke, and Rousseau.  In what way did the Social contract inform debates during the French Revolution?
How were slaves acquired in africa : How were slaves acquired in Africa, and how was slavery practiced in North America? How did paternalism work as part of the culture of race enslavement?No word limit or requirement
Two investment accounts : You have your choice of two investment accounts. Investment A is a 14-year annuity that features end-of-month $1,350 payments and has an interest rate of 7.2 percent compounded monthly. Investment B is a 6.7 percent continuously compounded lump sum i..
What have been the determinants of american : What have been the determinants of American policy toward the Middle East? Further, have our strategic priorities shifted in recent years?

Reviews

Write a Review

Financial Management Questions & Answers

  Non-financial information should accountants disclose

The numbers don't tell the whole story. Accountants use notes to the financial statements to provide additional information and clarification. What types of non-financial information should accountants disclose? Some people argue that you can never i..

  The current share price problem

Bui Corp. pays a constant $12 dividend on its stock. The company will maintain this dividend for the next nine years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price?

  Sales increase

Pierce Furnishings generated $4 million in sales during 2012, and its year-end total assets were $3.2 million. Also, at year-end 2012, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,..

  Describe cyclical variations and seasonal variations

We’ve already discussed seasonal variations and how they result from the predictable shopping habits of consumers. Describe cyclical variations. How do they compare to seasonal variations?

  Price for a foreign currency trade

A price for a foreign currency trade that will be executed thirty days from now is called a:

  Central bank directly controls both inside and outside money

Central bank directly controls both inside and outside money. Outside money is that part of the money supply produced by the private banking system. Inside money refers to the quantity of notes and coin in the economy.

  Earnings and dividends per share-what is current stock price

ACME Inc’s earnings and dividends per share are expected to grow indefinitely by 5% a year. If next year's dividend is $10 and the market capitalization rate is 8%, what is the current stock price? ACME Inc’s growth will stop after year 3. In year 4 ..

  Using the line of credit to pay off the credit cards

A couple bought a $300,000 home four years ago using a 15 year loan with an annual rate of 4.5% and a 20% down payment. What would be their monthly payments? Today they want to use a home equity line of credit to pay off some credit card debt. How mu..

  Described as the opposite of stock dividends

Which of the following can be best described as the opposite of stock dividends, i.e., a reverse stock split?

  What is the net income for the firm

Travis, Inc., has sales of $387,000, costs of $175,000, depreciation expense of $40,000, interest expense of $21,000, and a tax rate of 35 percent. What is the net income for the firm?

  Roughly evenly split between credit and cash sales

On March 31, 2013, Mike's Bike Shop had an outstanding accounts receivable of $19,000. Mike's sales are roughly evenly split between credit and cash sales, with the credit sales collected half in the month after the sale and the remainder 2 months af..

  You are planning to purchase 100 shares of preferred stock

you are planning to purchase 100 shares of preferred stock and must choose between stock a and stock b. stock a pays an

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