What is the price of the bond

Assignment Help Financial Management
Reference no: EM131329254

1. Calculate the price of a five-year, $1,000 par value bond that makes semiannual payments, has a coupon rate of 8 percent, and offers a yield to maturity of 7 percent. Recalculate the price assuming a 9 percent YTM. What is the general relationship that this problem illustrates?

2. A $1,000 par value bond makes annual interest payment of $75. If it offers a yield to maturity of 7.5 percent, what is the price of the bond?

Reference no: EM131329254

Questions Cloud

Explain why that term is important to hrm : Define the term. For any copied information, please use quotation marks and citation. Explain why that term is important to HRM. Give an example of how you would use that term at work or in practice
What can you learn from the leaders experiences : How is your leadership style similar (or different than) to the leader your selected? How are they different? What can you learn from this leader's experiences?
Calculate the bonds coupon rate and coupon yield : A bond makes two $45 interest payments each year. Given that the bond's par value is $1,000 and its price is $1,050, calculate the bond's coupon rate and coupon yield.
Show that the multiplicative property holds for rsa : Show that the multiplicative property holds for RSA, i.e., show that the product of two ciphertexts is equal to the encryption of the product of the two respective plaintexts.
What is the price of the bond : Calculate the price of a five-year, $1,000 par value bond that makes semiannual payments, has a coupon rate of 8 percent, and offers a yield to maturity of 7 percent.
Discuss how setting goals can lead to greater career success : Create an opening statement or thesis, developing a core theme for your paper. Include at least one educational goal and one career goal, and discuss how setting goals can lead to greater educational and career success.
What native americans tribes were forced to leave florida : In the document below, Andrew Jackson is holding the presidential power of a veto in his hand. Identify a controversial veto that Jackson used during his presidency.In this document, Andrew Jackson is depicted as king. Identify and explain one a..
How much are the bonds worth : A $1,000 par value bond pays a coupon rate of 8.2 percent. The bond makes semiannual payments, and it matures in four years. If investors require a 10 percent return on this investment, what is the bond's price?
What happened to the price of your bond : Suppose you purchased one of these bonds at par value when it was issued. Right away, market interest rates jumped, and the YTM on your bond rose to 6 percent. What happened to the price of your bond?

Reviews

Write a Review

Financial Management Questions & Answers

  The appropriate capital budgeting decision rule

The appropriate capital budgeting decision rule is ____

  What is the major determinant of bond prices

What is the major determinant of bond prices? Explain your answer. The ABC bond carries a 6.5% semi-annual coupon rate and matures in 23 years. If the market yield on these bonds is 8%, calculate the price of the bond. If interest rates (yields) do n..

  Constant growth valuation-what stock price is expected

Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $38 a share. The stock just paid a dividend of $1.50 a share (i.e., D0 = $1.50), and the dividend is expected to grow forever at a constant rate of 5% a year. What stock pric..

  Compute the value of client operations

If the company's weighted average cost of capital is 13% and its free cash flows are expected to grow at a L-T sustainable growth rate of 5% in all years after year 4, what is the value of Client's operations (rounded to the nearest million)?

  Estimated value of operations

EMC Corporation has never paid a dividend. Its current free cash flow of $510,000 is expected to grow at a constant rate of 4%. The weighted average cost of capital is WACC = 10%. Calculate EMC's estimated value of operations.

  Interest rate that is what would be present value of loan

Assume a bank loan requires an interest payment of $85 a year and principal payment of $1,000 at the end of the loan date/year life. How much this loan could be sold for to another bank if the loans of similar quality care of a 8.5% interest rate tha..

  Firm save by raising all of the debt in a single issue

Euro corporation is financing an on going construction project the firm will need $ 5,000,000of new capital during each of the next 3 years. Yearly flotation costs for the separation issues of debt would be3.0% of the gross amount. Ignoring time valu..

  Discuss the basic method used to form portfolios

In the predictability lecture, we discussed evidence concerning violations of the weak form of the EMH that are based upon lagged return trading strategies. Briefly discuss the three types of strategies (that is, long, intermediate, and short return ..

  Evaluate the behavior of the value of stock market

Prepare a graph in excel where present the movement of the value of each action to the period. Indicate therein the areas where change is more drastic and that happened that day that could cause this change.

  What is heusers after-tax cost of debt

The heuser company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is heuser's after-ta..

  The pretax or the aftertax cost of debt

Jiminy's Cricket Farm issued a 30-year, 8.4 percent semiannual bond 9 years ago. The bond currently sells for 90.5 percent of its face value. The company’s tax rate is 30 percent. What is the pretax cost of debt? What is the aftertax cost of debt? Wh..

  What would philips ending cash balance be

Philip Morris expects the sales for his clothing company to be $630,000 next year. Philip notes that net assets (Assets? Liabilities) will remain unchanged. His clothing firm will enjoy a 10 percent return on total sales. He will start the year with ..

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