What is the total rate of return on the bond

Assignment Help Financial Management
Reference no: EM131059095

a. Find the bond's price today and four months from now after the next coupon is paid. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Current price $ Price after four months $

b. What is the total rate of return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Total rate of return % per six months

Reference no: EM131059095

Questions Cloud

Expanding rapidly-currently needs to retain all of earnings : Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $0.50 coming 3 years from toda..
What set of lease payments will make lessee-lessor equally : An asset costs $550,000 and will be depreciated in a straight-line manner over its three-year life. It will have no salvage value. The corporate tax rate is 34 percent, and the appropriate interest rate is 10 percent. What set of lease payments will ..
What is the stocks current value per share : Thomas Brothers is expected to pay a $1.9 per share dividend at the end of the year (that is, D1 = $1.9). The dividend is expected to grow at a constant rate of 8% a year. The required rate of return on the stock, rs, is 12%. What is the stock's curr..
Compute the current price of the bond : Katie Pairy Fruits Inc. has a $1,000, 20-year bond outstanding with a nominal yield of 15 percent (coupon equals 15% × $1,000 = $150 per year). Assume that the current market-required interest rate on similar bonds is now only 12 percent. Compute the..
What is the total rate of return on the bond : Find the bond's price today and four months from now after the next coupon is paid. What is the total rate of return on the bond?
What is the return from holding the bond for the first year : You have been asked to value a bond that has a coupon of 3.00%, a maturity of 14 years, a par value of $100,000, and a yield to maturity of 3.25%. What is the current price of the bond? In one year the bond is priced to yield 3.50%, what would be the..
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 ..
Issuing convertible debt make a firm worse off : Start by describing what convertibles are. Why would a firm choose to issue a warrant or convertible? What are the key differences between firms that issue these types of financial instruments and those that do not? In what situations could a firm be..
Bonds trading-what is the coupon rate of the bond : Beam Inc. bonds are trading today for a price of $1287.99. the bond currently has 22 years until maturity and has a yield to maturity of 5.26%. The bond pays annual coupons and the next coupon is due in one year. What is the coupon rate of the bond?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the expected value of this opportunity

A black box has a total of 10 balls sitting inside. One ball is labeled $100. Two balls are labeled $200, and seven balls are labeled $300. Suppose that you are offered the opportunity of picking one ball at random, meaning you choose one ball but yo..

  ART has come out with a new and improved product

ART has come out with a new and improved product. As a result, the firm projects an ROE of 30%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3.0 per share. Investors expect a 16% rate of return on the stock. What pri..

  Bid price-brokerage fees

The bid price of MassNet Corporation is 11.60 and the offer price is 12.40. Ignoring brokerage fees, an investor will have to pay $ to buy 60 of MassNet common stock directly from the dealer.

  How much must he set aside annually from until retirement

Arthur Anderson wants to retire in 15 years, and would like to put aside enough to give himself an income of $25,000 per year for 25 years after retirement. If he an earn 10% compounded annually over the whole time span and save and equal amount each..

  Several programs believed to reach the target population

A pharmaceutical company develops a media campaign targeting aging women at risk for osteoporosis. The ad is scheduled to run a total of 21 times and will air on several programs believed to reach the target population.

  Liquidation sale

Mathias has been the sole proprietor of a clothing store for many years. He intends to retire after holding a "liquidation sale". He wants to avoid ordinary income from the sale of the business inventory, so he shuts down the store for one month and ..

  Indifferent between accepting project and not accepting

Your firm is contemplating the purchase of a new $575,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $59,000 at the end of that time. At what level of pretax cost ..

  Diversifying away country risk

Diversifying Away Country Risk. Why do you think that an MNC’s strategy of diversifying projects interna­tion­ally could achieve low exposure to overall country risk?

  What is the effective annual yield-current yield on the bond

Martin Software has 8.2 percent coupon bonds on the market with 21 years to maturity. The bonds make semiannual payments and currently sell for 106.9 percent of par. What is the current yield on the bonds? What is the effective annual yield?

  The correlation between stocks is equal

The correlation between stocks A and B is equal to the:

  What is the beta of the firms assets

The risk-free rate equals 6%, and the expected risk premium on the market portfolio equals 7%. A particular company has bonds outstanding that offer investors a yield to maturity of 6.5%. What is the beta of the firm's assets?

  Narrative information of the subject being covered

Reports should cover some very specific information relating to the general subject matter of the course and to the subject area of the individual class session. Narrative information of the subject being covered (the story). Quantitative information..

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