What is the interest rate risk on purchase

Assignment Help Financial Management
Reference no: EM131859428

On October 15, 2012 the real estate company Robert hf. gave out a bond. Suppose we have bought 100 millions dollars at nominal valute of the bond at issue on par.

Interest rate: 4,3%

First interest date: 15 October 2012

Dayrule = 30/360

Date of issue: 15. October 2012

Bond maturity: 15. October 2042

You can't pay up the bond to October 2017 but in between 15. October 2017 and to 31. December 2022 you can pay up the bond.

a) What is the interest rate risk on this purchase? (Compare the yield to maturity with a another bond which is the most comparable to this is one) Please show me how to calculate this step by step.

Reference no: EM131859428

Questions Cloud

Assess each alternative benefits and costs : Describe and assess each alternative’s benefits and costs.
Bonds for some much-needed expansion projects : Chamberlain Co. wants to issue new 15-year bonds for some much-needed expansion projects.
When applied to return on wealth over one-year horizon : Greta, an elderly investor, has a degree of risk aversion of A = 3 when applied to return on wealth over a one-year horizon.
What is the component volume variance : what are the profit variance, revenue variance, and cost variance? Consider the revenue variance. What is the component volume variance? The price variance?
What is the interest rate risk on purchase : On October 15, 2012 the real estate company Robert hf. gave out a bond. What is the interest rate risk on this purchase?
The zero lower bound on short term interest rates : The zero lower bound on short term interest rates is not a problem,
What is the effective interest rate per year : Find the interest rate per week. What is the nominal interest rate per year? What is the effective interest rate per year?
Calculate bruno acquisition cost for this effort : Calculate and label the level one and level two acquisition rates. Calculate Bruno’s acquisition cost for this effort.
Annual market share of the acme widget company : calculate the annual market share of the Acme Widget Company for each year.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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