What total cash will you receive from the bond

Assignment Help Financial Management

Reference no: EM133487769

Discussion Post: Financial Management

Question I. Consider a bond that promises the following cash flows. The required discount rate is 12%

years	0	1	2	3	4
Promised payments		160	170	180	230

You plan to buy this bond, hold it for 2½ years, and then sell the bond.

Question 1. What total cash will you receive from the bond after the 2½ years? Assume that periodic cash flows are reinvested at 12%.

Question 2. If immediately after buying this bond, all market interest rates drop to 11% (including your reinvestment rate), what will be the impact on your total cash flow after 2½ years

Question 3. Assuming all market interest rates are 12%, what is the duration of this bond?

Question II. Foreign exchange rates, like stock prices, should follow a random walk." Is this statement true, false, or uncertain? Explain your answer

Question III. Which provisions of the Global Legal Settlement do you think are beneficial, and which are not?

Reference no: EM133487769

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