What is the maximum price you will pay for a bond

Assignment Help Financial Management
Reference no: EM131063990

What is the maximum price you will pay for a bond with a face value of 20000 and a coupon rate of 9% paid annually, if you want a yield to maturity of 12%. Assume the bond will mature in 15 yrs and he first dividend payment will be received in one year

Reference no: EM131063990

Questions Cloud

What options does the patient have regarding the mri : What options does the patient have regarding the MRI?
How might this viewpoint affect one perception of nature : What characteristics of early Hinduism set it apart from the monotheistic and polytheistic religious beliefs of ancient Mesopotamia?
What is the value of the companys stock : A for profit nursing home chain has paid a $4 per share dividend for many years and expectations are the dividends will continue at that level for years to come. If investors require a 12 percent rate of return on investments with similar risk, what ..
Analysis of mutually exclusive alternatives : When performing a proper analysis of mutually exclusive alternatives, the best alternative must yield the largest rate of return. For compounding more often than once per year, and positive nominal interest, an effective interest rate will ALWAYS be ..
What is the maximum price you will pay for a bond : What is the maximum price you will pay for a bond with a face value of 20000 and a coupon rate of 9% paid annually, if you want a yield to maturity of 12%. Assume the bond will mature in 15 yrs and he first dividend payment will be received in one ye..
Write about the movie the quiet american : Write about the movie The Quiet American. Please start a new thread in the designated forum and post your own weekly discussion topic. Your topic must relate to the film of the week or at least to an issue tangentially related to the film.
Connsidering purchasing new software suite : You are connsidering purchasing a new software suite for your consulting company. You estimate that the software will have a useful life of 5 years, with negligible market value at that point. what would be the maximum amount that you should spend on..
What present issues have their roots in the family past : Apply family systems theory to your family of origin, identifying and discussing across all four generations any: triangles; coalitions; alliances; cut-offs; gender, ethnic and class influences. Clearly describe the family patterns, types of relat..
Current challenges employees face within the organization : Why does your company need a Code of Ethics? How can this Code of Ethics address the current challenges employees face within the organization? If implemented, what example may this document set for others in the news media industry?

Reviews

Write a Review

Financial Management Questions & Answers

  Assume that the current yield to maturity on the bond

Compute the price of a $5,000 par value bond with a coupon rate of 7.5% (semi-annual payments) and 19 years remaining to maturity. Assume that the current yield to maturity on the bond is 8.60%.Round all dollar answers to 2 decimal places

  Who intended to strengthen the national government

Who intended to strengthen the national government by having the national government assume the state debts owed to bondholders and foreign investors? Who believed that the national government could do anything the constitution did not forbid it to d..

  What is the company sustainable growth rate

The Wintergrass Company has an ROE of 13.7 percent and a payout ratio of 40 percent. What is the company’s sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

  Is the security now discount bond or premium bond

What would be the value a 1-YEAR, $1,000 PAR VALUE BOND WITH A 10 PERCENT ANNUAL COUPON if, just after it had been issued, the expected inflation rate rose by three percentage points, caus¬ing investors to require a 13% return? Is the security now a ..

  How much will you pay for the stock

The Sleeping Flower Co. has earnings of $1.48 per share. If the benchmark PE for the company is 15, how much will you pay for the stock? If the benchmark PE for the company is 18, how much will you pay for the stock?

  Currency appreciation is good for country

“A currency appreciation is good for a country, and currency depreciation is bad”. Please comment on this statement. Does this require a particular exchange rate regime? A level of International Reserves?

  Four different bond rating categories

The yield to maturity for 15-year bonds is as follows for four different bond rating categories. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

  What is the effective annual rate on arrangement

A firm sells its $1,190,000 receivables to a factor for $1,130,500. The average collection period is 1 month. What is the effective annual rate on this arrangement?

  What must the coupon rate be on the bonds

Essary Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $952. At this price, the bonds yield 6.1 percent. What must the coupon rate be on the bonds?

  Approach to retirement distribution at beginning of year

For how many years a retirement fund will last if one follows 4% approach to retirement distribution at the beginning of every year? Assume expected return and inflation to be 6% and 4.5% respectively?

  Determined that a rate of return

Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $4,800, $9,800, and $16,000 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determ..

  Recently issued two types of bonds

Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 9% annual coupon. The second issue consisted of 20-year bonds with a 6% annual coupon with warrants attached. Both bo..

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