What is the expected price of the bonds today

Assignment Help Financial Management

Reference no: EM131297363

Two year ago Lerner Co. issued bonds with a maturity of 15-year, a coupon rate of 8% paid semi-annually, and a par value of $1,000. Today, the market interest rate on these bonds is 6%. What is the expected price of the bonds today? Select one: a. $1,178.77 b. $1,190.55 c. $1,228.63 d. $1,211.96 e. $1,200.97.

Reference no: EM131297363

Questions Cloud

What is a debenture : What is a debenture? Why do you think that this is the most common form of corporate bond in the United States, but is much less commonly used elsewhere?

Estimating beta of investment is by using the market model : Another approach to estimating the beta of an investment is by using the market model. What is this? Can you find any good websites that provide an analysis? Be sure to give your own insights as well.

Company effective tax rate and cost of equity : A company has a capital structure of 40% debt and 60% equity. The YTM on the company’s bonds is 9%, and the company’s effective tax rate is 40%. The cost of equity is 13%. What is the company’s WACC?

Government and their extensive use of debt to finance growth : “Fannie Mae” (FNMA) and “Freddy Mac” (FHLMC) are Government Sponsored Enterprises (GSEs) and as such were perceived to have low risk. In the early 2000s. Former Federal Reserve Chairman Alan Greenspan stated that these institutions (“Fannie and Fre..

What is the expected price of the bonds today : Two year ago Lerner Co. issued bonds with a maturity of 15-year, a coupon rate of 8% paid semi-annually, and a par value of $1,000. Today, the market interest rate on these bonds is 6%. What is the expected price of the bonds today?

Bond-what is the modified duration : For the following bond, Par value: 1,000 Coupon rate: 8% paid annually Time to maturity: 3 years Interest rate: 4% What is the modified duration?

Calculate the amount of interest paid over life of mortgage : You plan to purchase an $150,000 house using a 30-year mortgage obtained from your local bank. The mortgage rate offered to you is 5.25 percent. You will make a down payment of 10 percent of the purchase price. Calculate your monthly payments on this..

Investment opportunity-what rate of return will you earn : Mitchell Investments has offered you the following investment opportunity: $6,000 at the end of each year for the first 5 years, plus $3,000 at the end of each year from years 6 through 10, plus $2,000 at the end of each year from years 11 through 20..

Beneficiary of trust fund established-compounded annually : A young man is the beneficiary of a trust fund established for him 25 years ago at his birth. If the original amount placed in trust was $30,000, how much will he receive if the money has earned interest at the rate of 5%/year compounded annually? Co..

User Account

All Pages