User Account

All Pages

What is the effective annual holding period yield

Assignment Help Finance Basics
Reference no: EM133062338

Assume that at the beginning of 2017, the expected Inflation rate for 2017and 2018 is 3.8%, for 2019 is 6%, for 2020 and 2021 it is 4.65%.

What is the average interest rate, over the five year period, if the real rate of interest is 1.25%? Do NOT use an arithmetic average. (***Carry all decimal places for interim calculations, round final answers to 4 places.***)

(b)  Suppose that you buy a 6% annual coupon bond for $1,120.33. The bond has 15 years to maturity. Five years after purchasing the bond you sell it for $1,150.

What is the effective annual holding period Yield?

(c) A major chemical manufacturer has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semi-annually).

What is the current value of these bonds, assuming that the level of interest rates has now risen to an effective rate of 16.64 percent?

Reference no: EM133062338

Questions Cloud

Calculate the value of the european put in point : Draw a 2-period binomial tree for a stock with $800 price and 50% standard deviation.
Compute the contribution margin ratio and break-even sales : Croftsman Company recorded the following information for its main product selling price per unit 200 Costs per unit. Compute the contribution margin ratio
Form of market efficiency : A daytime trader has been bragging to his Foundations of Finance classmates that he has been making money consistently exploiting a little-known trick in the st
Major data mining processes : What are the major data mining processes? List and briefly define the phases in the CRISP-DM process. How does CRISP-DM differ from SEMMA?
What is the effective annual holding period yield : Assume that at the beginning of 2017, the expected Inflation rate for 2017and 2018 is 3.8%, for 2019 is 6%, for 2020 and 2021 it is 4.65%.
What is asymmetric information : What is asymmetric information and how does it affect the financing decision of a corporation? What does the pecking order theory imply to managers
How the capital structure of a company can limit : Concisely explain how the capital structure of a company can limit the strategies a company can pursue. Answer completely.
Evaluating a project proposal accept a project : Would a company evaluating a project proposal accept a project if the estimated return on investment (ROI) exceeded the cost of capital by half a percent?
The main concerns when collecting evidence : What are the main concerns when collecting evidence? What precautions are necessary to preserve evidence state?

Reviews

Write a Review

Finance Basics Questions & Answers

  What are the strengths and weaknesses of peer review process

Describe the basic objectives of the research report written in APA style. What information goes in each of the five major sections?

  What is the geometric average

What is the geometric average of -12%, 20%, and 25%?

  Capital intensity have on its financing requirements

In general, what impacts may a firm's dividend policy, profitability, and capital intensity have on its financing requirements?

  Briefly discuss the methods available for a firm to

briefly discuss the methods available for a firm to repurchase its shares and explain why you might expect the stock

  Example of the experimental research strategy

Finally, Dr. Jones compared the activity level for the high-sugar group with the activity level for the low-sugar group. Explain why Dr. Jones' study is not an example of the experimental research strategy.

  Financial manager of a furniture manufacture

Anne Teak, the financial manager of a furniture manufacturer, is considering opening a lock-box system.  She forecasts that 800 payments a day will be made to lock boxes with an average payment size of $2,000.  The bank's charge for operating the loc..

  What is your total dollar return on this investment

One year ago, you purchased 400 shares of stock for $12 a share. The stock pays $0.22 a share in dividends each year. Today, you sold your shares for $28.50 a share. What is your total dollar return on this investment?

  How much will you have in the account 6 years from today

How much will you have in the account 6 years from today?

  Write a short comment that in which year company

Write a short comment that in which year company was performing better on the basis of calculated ratios.

  Excess cash for a stock repurchase

Assume the firm uses all of its excess cash for a stock repurchase. What will the price per share be after the repurchase?

  Advantages and disadvantages of using futures contracts

Discuss the advantages and disadvantages of using futures contracts, forward contracts and option contracts on gold for the purpose of hedging exposure

  Calculate the future value of the account one year after

An account containing £5000 is to be the recipient of an annuity with a term of 8 years, and a periodic payment of £1000. Calculate the future value of the account one year after the last deposit has been made.

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