What is the total rate of return on the bond

Assignment Help Financial Management

Reference no: EM131350527

Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has 3 years until maturity.

a. Find the bond's price today and 6 months from now after the next coupon is paid. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Current price $.......................

Price after six months $.............................

b. What is the total (6-month) rate of return on the bond? (Omit the "%" sign in your response.)

Rate of return ..............................%

Reference no: EM131350527

Questions Cloud

What is this investment worth : You expect an investment to return $11,300, $14,600, $21,900, and $38,400 annually over the next four years, respectively. What is this investment worth to you today if you desire a rate of return of 16.5 percent?

What is price of these three bonds in dollars : Bond Quotes Consider the following three bond quotes; a Treasury note quoted at 104:22, and a corporate bond quoted at 97.85, and a municipal bond quoted at 104.05. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond..

What is the most money you can make on the position : The common stock of the BDF Corporation has been trading in a narrow range around $100 per share for months, and you believe it is going to stay in that range for the next month. What options strategy, using both put and call options, could you use t..

Deposit with no outstanding checks or uncleared deposits : You have $49,762 on deposit with no outstanding checks or uncleared deposits. One day you write a check for $11,618 and then deposit a check for $7,880. What is your net float?

What is the total rate of return on the bond : Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has 3 years until maturity. Find the bond's price today and 6 months from now after the next ..

Compute the current value : Compute the current value An enterprise buget for soybeans shows a yield of 46 bushels, a selling price of $11.80 per bushel, and total cost of $460.20 per acre. What is the break-even yield?

Stock value and dividend initiation-compute current value : Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of $0.95 per share in 2 years. This dividend will grow at 13 percent indefinitely. Using a 15 percent discount rate, compute the current valu..

Write a summary of your communication quiz score : Write a summary of your communication quiz score, describing your strengths and weaknesses and how you plan to develop your communication skill set. Additionally, what aspects of communication that were not covered by the quiz do you think are im..

Why you believe the action is required for the citations : Based on the Citation and Notification of Penalty letter you received in Unit III, prepare a document that summarizes at least five actions you would take as soon as possible after you reviewed the letter. For each of the actions, you must state ..

User Account

All Pages