What is the quoted price of the note

Assignment Help Financial Management
Reference no: EM131608622

Consider a Corporate bond that matures in 8.24 years, has a coupon rate of 5.21%, and pays a semi-annual coupon. The yield to maturity associated with this bond is 8.35% when quoted on an annual compounding basis. Please answer the following:

1. What is the value of the note?

2. What is the quoted price of the note?

3. What is the duration of the note?

4. What is the convexity of the note?

5. Please use both convexity and duration to estimate the expected change in the value of the bond as the yield to maturity when quoted on a semi-annual basis decreases by 75 basis points.

Reference no: EM131608622

Questions Cloud

Detail empirical tests of the capital asset pricing model : Discuss in detail empirical tests of the Capital Asset Pricing Model. Make sure to discuss the specific testing methodologies fully.
The firm capital structure has no impact on firm value : In a standard M&M environment (perfectly efficient capital markets, etc...), the firm’s capital structure has no impact on firm value.
What makes aggressive financing strategy tempting to firm : What is the most conservative financing strategy a firm could implement? What makes an aggressive financing strategy tempting to a firm?
Calculate the time value of money problems : Calculate the following Time Value of Money problems. Why would an investor agree not take dividend and agree to let a firm reinvest earnings back into a firm.
What is the quoted price of the note : What is the value of the note? What is the quoted price of the note? What is the duration of the note?
Annual standard deviation of return on stock equity : The annual standard deviation of return on stock A's equity is 37 percent. which stock is riskier? Why?
Calculate before-tax and after-tax cash flows for each year : Calculate the before-tax and after-tax cash flows for each year of the holding period and the before-tax and after-tax equity reversion.
Definitions of credit risk that a bank could adopt : Write up on the various definitions of credit risk that a bank could adopt,
Asset is the present value of that asset future cash flows : One of the basic financial principles is that the value of any asset is the present value of that asset's future cash flows.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the total amount of money that someone would pay

What is the total amount of money that someone would pay if they financed (i.e, borrowed the money) a $30,000 car over 72 months?

  Issue of preferred stock-what is the required return

Moraine, Inc., has an issue of preferred stock outstanding that pays a $3.15 dividend every year in perpetuity. If this issue currently sells for $92 per share, what is the required return?

  What are the cost and schedule variances for the project

A project in its 26th week has an actual cost of $270,000. It was scheduled to have spent $261,000. For the work performed to date, the budgeted value is $272,000. What are the cost and schedule variances for the project? What are the SPI and CPI?

  Market expect perpetual average growth rate

Suppose future expected return and expected dividend growth are both constant forever into future. What does that market expect perpetual average growth rate.

  Considering installation of computer process control syatem

Delaware Chemicals is considering the installation of a computer process control system in one of its processing plants. This plant is used for 3,000 operating hours per year, to produce a proprietary demulsification chemical.  the selling price of t..

  How much will the cost of equity increase

Martha's Interiors has a current beta of 1.2. The market risk premium is 6 percent and the risk-free rate of return is 4 percent. By how much will the cost of equity increase if the company completes an acquisition such that their company beta rises ..

  Foreign bond with the same risk and maturity characteristics

Suppose that spot and forward exchange rates are measured in units of domestic currency per unit of foreign currency. There is a positive forward premium for the domestic currency. If covered interest parity holds, what should be true of the differen..

  What will be its optimal cash return point

Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $264,000 but expects the standard deviation in net daily cash flows to be $13,900, the effective annual rate on marketable securities to be 3.8 percent per year, and ..

  What is annual percentage rate on your account

Your credit card company charges you 1.18 percent per month. What is the annual percentage rate on your account?

  What is its cost of common equity

The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $26.25 per share; its last dividend was $1.80; and it will pay a $1.89 dividend at the ..

  What is the annualized cost of forgoing the discount

If a firm buys trade credit terms of 4/15, net 60 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount ( assume a 360 -day year). The Annualized cost of trade credit terms of 4/15..

  What economic factors directly affect the bond markets

What economic factors directly affect the bond markets?- Determine the real rate of return on a bond when inflation is five percent and the bond yield is 4.6 percent.

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