What is the total rate of return on the bond

Assignment Help Financial Management

Reference no: EM131176445

Consider a bond paying a coupon rate of 7.75% per year semiannually when the market interest rate is only 3.1% per half-year. The bond has six years until maturity.

a. Find the bond's price today and twelve 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 twelve 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: EM131176445

Questions Cloud

Nonconstant growth valuation : A company currently pays a dividend of $3.75 per share (D0 = $3.75). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.1..

What will be the initial outlay for the project : The faraway moving company is in a major plant of expansion that involves the expenditure of $211 million in the coming year.The firm plans on financing the expansion through retension of $140 in firm earning and borrowing the remaining $71 million. ..

Currently the average house in your town cost : Currently the average house in your town cost $275,000 and is increasing in value by 6.0% per year. In six years you plan to purchase an average house and will need to have a 20% down payment. If you currently have $3,900 in your investment account, ..

Who intend to begin saving money for retirement : David and William are brothers who intend to begin saving money for retirement when each is exactly 25. Each brother intends to save $3,600 per year before taxes and invest the money to accumulate wealth and to supplement his income in retirement. Ho..

What is the total rate of return on the bond : Consider a bond paying a coupon rate of 7.75% per year semiannually when the market interest rate is only 3.1% per half-year. The bond has six years until maturity. Find the bond's price today and twelve months from now after the next coupon is paid...

Calculate expected dividend yield-growth rate in dividends : Return on Common Stock You buy a share of The Ludwig Corporation stock for $18.20. You expect it to pay dividends of $1.06, $1.15, and $1.2476 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $27.01 at the end of 3 years. C..

Contrast the three different theories of money demand : Compare and contrast the three different theories of money demand. Given the quantitative theory of money, What happens to real GDP if the money supply is cut in half, velocity is stable and prices are sticky? What happens to prices if the money supp..

What is rate of return you earned on japanese securities : One year ago you converted $1,000 to yen at the rate of 125 yen to $1 and invested in Japanese securities. You just sold the securities for 137,500 yen. The current exchange rate is 111 yen to $1. What is the rate of return you earned on the Japanese..

Compounds the financial charges semi-annually : The ABC Construction Company is considering the purchase of a diesel power shovel to improve its productivity. The company finances the purchase by borrowing from a local bank with no origination fee. The pricipal will be repaid with the compounded i..

User Account

All Pages