What is the loss or gain to a us investor who holds bond

Assignment Help Financial Management
Reference no: EM132018058

Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 2,400 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 10 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1.

a. What is the loss or gain to a Swiss investor who holds this bond for a year? (Input the amount as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Specify if Loss or Gain to Swiss investor and percentage %

b. What is the loss or gain to a U.S. investor who holds this bond for a year? (Input the amount as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Specify if Loss or Gain to U.S. investor and percentage %

Reference no: EM132018058

Questions Cloud

Dividends for stock grow forever at constant rate : If we assume the dividends for a stock grow forever at a constant rate, then we are also assuming:
Determine the effective dividend tax rate for a buy and hold : What is the effective dividend tax rate for a buy and hold individual investor in 2006 ? Please show all work.
Does this contradict the semi-strong form of the emh : You find that the slope on x_t is statistically significant. Does this contradict the semi-strong form of the EMH? Why or Why not?
What is the clean price of the bond : You purchase a bond with an invoice price of $1,030. The bond has a coupon rate of 7.8 percent, and there are four months to the next semiannual coupon date.
What is the loss or gain to a us investor who holds bond : Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 2,400 Swiss francs.
Determine what is your net profit : Suppose you purchase ten call contracts on Macron Technology stock. The strike price is $65, and the premium is $2.10.
How would you advise her given the current-future stance : One of your clients tells you she is considering to purchase long-term bonds because their interest rate might go up to 8%.
What is the equivalent effective semiannual interest rate : Suppose that a savings account pays a nominal rate of interest of 9.2% convertible daily. What is the equivalent effective semiannual interest rate?
What is your maximum possible loss : What is your maximum possible loss? What happens to the maximum loss if you simultaneously place a stop-buy order at $210?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the present value of all future payments

Bridget Jones has a contract in which she will receive the following payments for the next five years: $23,000, $24,000, $25,000, $26,000, and $27,000. She will then receive an annuity of $29,000 a year from the end of the 6th through the end of the ..

  We can see that the prices has exchanged

We can see that the prices has exchanged, but demonstrate analytically that this is not a coincidence.

  Appropriate data and calculations to make the decision

The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell your 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years..

  Bonds mature if the current value of the bonds

Regatta, Inc., has bonds outstanding that pay an 8.250 percent coupon rate on a $1,000 face value. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. How many years until the bonds mature if the current value of ..

  Why is it important concept for e-marketers to understand

What is price transparency and why is it an important concept for e-marketers to understand?

  What is the after-tax cost of the preferred equity

What is the after-tax cost of the following preferred equity? The par value of the preferred share is $100 and the annual dividend is 6%

  Concerned about your retirement

You are 21 years old and are concerned about your retirement. You want to live comfortably when you retire 49 years from now. Since you won’t have a house payment (you expect to have the mortgage paid off by then), you figure you will need only $4,00..

  Constant growth stock valuation

Investors require a 16% rate of return on Brooks Sisters' stock (rs = 16%). a.What would the value of Brooks's stock be if the previous dividend was D0 = $4 and if investors expect dividends to grow at a constant compound annual rate of

  Derivatives in hedging foreign currency transactions

The importance of derivatives in hedging foreign currency transactions.

  Both stocks have equal reward-to-risk premiums

Stock A has a beta of 1.09 while Stock B has a beta of .76 and an expected return of 8.2 percent. What is the expected return on Stock A if the risk-free rate is 4.6 percent and both stocks have equal reward-to-risk premiums? 11.73 percent 8.07 perce..

  Demonstration the solving process

If you put that money an accumulator account paying one percent interest per year. Demonstration the solving process.

  Calculate the company market value cost of debt

A company's book value of equity is $200 million, and its book value cost of equity is 24%. Calculate the company's market value cost of debt.

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