What is the value of the bond

Assignment Help Corporate Finance

Reference no: EM132206404

Question - There is a bond that pays $100 per year interest, with a $1,000 par value. It matures in 15 years. The market required yield to maturity on a comparable bond is 12%.

1. What is the value of the bond?

2. How does the value change if the yield to maturity on a comparable bond increase to 15%? What if it decreases to 8%.

3. Explain the above questions (part b) with the concepts of interest rate risk, premium bonds and discount bonds.

4. Recalculate the answer in b, with the assumption that the bond matures in 5 years (instead of 15 years).

5. Explain the above questions (part d) with the concepts of interest rate risk, premium bonds and discount bonds.

Reference no: EM132206404

Questions Cloud

Write a method which returns the largest value in an array : Write a method named maxElement, which returns the largest value in an array that is passed as an argument.

Write a method which will return largest values : Write a method which will return largest values of x, y, and z using method header: public static double max.

Write a mips program using qtspim that reads n numbers : Write a MIPS program using QtSpim that reads n numbers from keyboard and put them into a single linked list. 0 will be the last number entered by the user.

Several thousand dollars to upgrade the aircraft avionics : You have spent several thousand dollars to upgrade the aircraft’ s avionics.

What is the value of the bond : There is a bond that pays $100 per year interest, with a $1,000 par value. It matures in 15 years. What is the value of the bond

Identify the desirable security properties : Identify the desirable security properties for (1) data stored on the tag, and (2) insurance policy based on the five security objectives.

Write a method that will take an integer array and reverse : Write a method, that will take an integer array and reverse it and return as a double array.

Discuss the value and importance of self-reflection : Discuss the value and importance of self-reflection in regard to the process of leadership and coaching.

Create a new array with the elements of the parameter : Write a method in java that accepts an array of type char as a parameter and creates a new array with the elements of the parameter in reverse order.

User Account

All Pages