What is the return on the investment

Assignment Help Finance Basics
Reference no: EM132003152

Assume a three-year bond that pays a 10% coupon. It has a yield to maturity Y = .20%, so R = .2. Considering PAR = 1000, first get the bond price. Suppose now that the owner of the bond decides to sell it in the secondary market after receiving the first coupon. What is the return on the investment if interest rate increases to R=25%? What is the return on the investment if interest rate decreases to R=15%?

Reference no: EM132003152

Questions Cloud

Book-value balance sheet and a market-value balance sheet : What is the difference between a book-value balance sheet and a market-value balance sheet? Which provides better information to investors and management?
Company financing activities : What is the net cash used in investing activities by True Blue? What is the net cash provided by the company's financing activities?
Should companies perform bank reconciliations : Should companies perform bank reconciliations? Why or why not? Is it just as important for individuals to perform bank reconciliations
How many shares must it sell : The management would like to raise $200 million in an SEO. If the underwriter charges 5% of gross proceeds, how many shares must it sell?
What is the return on the investment : What is the return on the investment if interest rate increases to R=25%? What is the return on the investment if interest rate decreases to R=15%?
Calculate vintage return on equity : The total assets to equity ratio for the firm is 2.1. Calculate Vintage's return on equity.
Measure the level of debt financing : Please explain how the DuPont ratio is calculated and used to measure the level of debt financing.
Determine how efficiently the company manages its operations : Please, in detail describe how profitability measures are used to determine how efficiently the company manages its operations
One investment for the years : Imagine that you have $100,000 to invest. You are going to invest it all in one investment for the next 5 years, at least, at which point you will reevaluate

Reviews

Write a Review

Finance Basics Questions & Answers

  Identify and discuss at least three things firms can do to

identify and discuss at least three things firms can do to diminish the risk of doing business internationally. discuss

  Describe the primary services a bank provides to a firm

Describe the primary services a bank provides to a firm. How is the bank compensated for these services?-Describe the techniques available to a firm for slowing disbursements.

  Compute the discount rate

Compute the discount rate. (Do not round intermediate calculations. Input your answer as a percent rounded up to the nearest whole percent.)

  What additional information does the fixed asset turnover

what additional information does the fixed asset turnover ratio provide over the total asset turnover ratio? for which

  Understand the financial condition of the organization

Why is the balance sheet important in order to understand the financial condition of the organization?

  What is the additional investment in net working capital

A project for Jevon and Aaron, Inc. results in additional accounts receivable of $400,000, additional inventory of $180,000, and additional accounts payable of $70,000. What is the additional investment in net working capital?

  Secondary-school fitness test

A physical fitness association is including the mile run in its? secondary-school fitness test. The time for this event for boys in secondary school

  What is the future value of the same annuity

If the future value of an ordinary, 7-year annuity is $6,500 and interest rates are 7.5 percent, what is the future value of the same annuity due?

  Accept the validity of the surprise ending that was not clr

Clearly state in your own words the “surprise ending” in the reading you selected. Identify the point in the reading when you realized that the ending would be different from what the beginning of the reading suggested that it would be.Since you were..

  Explain about the krebs-henseleit cycle

Describe about ureotelic, uricotelic and ammoniotelic animals and explain about the Krebs-Henseleit cycle?

  How can this information help you pick a stock

In this article, the type of information contained in a firm's income statement and balance sheet-both statements contained in an annual report or a Securities.

  Stock a has a current price of 3000 a beta of 175 and a

stock a has a current price of 30.00 a beta of 1.75 and a dividend yield of 6. if the treasury bill yield is 5 and the

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