What return did the bondholder earn in case

Assignment Help Financial Management
Reference no: EM131464235

A 6-year government bond makes annual coupon payments of 5% and offers a yield of 3% annually compounded. Suppose that one year later the bond still yields 3%. What return has the bondholder earned over the 12-month period? Now suppose that the bond yields 2% at the end of the year. What return did the bondholder earn in this case?

Reference no: EM131464235

Questions Cloud

Market rate of interest for an investment : Suppose the market rate of interest for an investment is 8%. What is the default risk premium
What constant rate is the stock expected to grow after year : At what constant rate is the stock expected to grow after Year 3?
What is the project initial investment outlay : Produce a projected capital budgeting cash flow statement for the Sneaker 2013 project. What is the project’s initial (year 0) investment outlay?
What should be the value of the loan so that the owner : What should be the value of the loan so that the owner will have the use of $9000?
What return did the bondholder earn in case : What return did the bondholder earn in this case?
What is widgets weighted average cost of capital : what is Widget’s weighted average cost of capital?
What is default risk premium : Suppose the market rate of interest for an investment is 8%. What is the default risk premium?
Equivalent effective semiannual interest rate : Suppose that a savings account pays a nominal rate of interest of 9.2% convertible daily. What is the equivalent effective semiannual interest rate?
Equal to dividend paid divided by stocks current price : The intrinsic value of equity is unknowable if stock does not pay dividends. dividend yield of stock is equal to dividend paid divided by stock’s current price.

Reviews

Write a Review

Financial Management Questions & Answers

  Invest in one of two different automated clicker cutters

Fantastic Footwear can invest in one of two different automated clicker cutters, A and B. The first cutter, A, has a $ 100 000 first cost. Another similar cutter with many extra features, B, has a $ 400 000 first cost. Cutter A will save $ 50 000 per..

  What is the expected market value of a bond

What is the expected market value of a bond that has 5 years to maturity, a yield of 6.5% a coupon rate of 7.5%, a cost basis of 10354.18 and a fair market value of 10,000? The bond pays interest semi-annually.

  What is the firms after tax cost of debt on the bond

A company is issuing a $1,000 par value bond that pays 7.0% annual interest and matures in 15 years that is paid semiannually. Investors are willing to pay $958 for the bond. The company is in the 18% marginal tax bracket. What is the firm's after ta..

  Acquires an oil and gas property interest

Jimmy acquires an oil and gas property interest for $600,000. Jimmy expects to recover 200,000 barrels of oil. Intangible drilling and development costs are $160,000 and are charged to expense. Other expenses are $40,000. During the year, 25,000 barr..

  What is riverbends marginal tax rate on the dividend

River bend inc. received a 220,000 dividend from stock it held in hobble corporation. Riverbend's taxable income is 3,020,000 before deducting the dividends received deduction (DRD), a 23,500 domestic production activities deduction,and a 189,000 cha..

  Water processing technology to eliminate periodic lawsuits

A gas company is evaluating new water processing technology to eliminate periodic lawsuits they face from environmental groups related to small wastewater spills. On average they face a S600.000 lawsuit (including all legal expenses) every five years..

  What is the slope of the capital market line

Assume that the expected rate of return on the market portfolio is 23% and the rate of return on T-bills (the risk-free rate) is 5%. The standard deviation of the market return is 25%. Assume that the market portfolio is efficient. What is the slope ..

  Make the acquisition attractive at an interest rate

Rent a wreck car rental agency has a contract with PM warranty, Inc. to do major repairs for $700 per car. The car rental agency estimates that it could repair its own cars for $300 each if it acquires a facility for $300000 now. A salvage value of $..

  Calculate the value of share of stock

Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: the stock price using the P/E ratio valuation method is $________ (round to the nearest cent.) The stock price using the dividend disco..

  What must expected return on the market be

A stock has an expected return of 11.6 percent, its beta is .91, and the risk-free rate is 5.8 percent. What must the expected return on the market be?

  Find the bills discount yield-money market yield

You just bought a 91-day treasury bill for $9,887. Find the bill’s discount yield. The bill’s money market yield. What is the discount yield on these securities? The discount yield on a money market instrument with a face value of $100,000 and a matu..

  Estimate the total payroll costs

The City of Payrolvia has 95 employees. The average annual salary for each employee is $54,000. Their benefit costs are roughly 20% of each salary. They must pay payroll taxes equal to 7% of each salary. They also give each employee an annual bonus o..

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