What will be the price of the eight-year bond

Assignment Help Financial Management
Reference no: EM131900613

Consider three bonds with 6.50% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will be the price of the 4-year bond if its yield increases to 7.50%? b. What will be the price of the 8-year bond if its yield increases to 7.50% c. What will be the price of the 30-year bond if its yield increases to 7.50%?

Reference no: EM131900613

Questions Cloud

According to straight-line method over its four-year life : Gemini, Inc., all-equity firm, is considering investment of $1.67 million that will be depreciated according to straight-line method over its four-year life.
What is the adjusted present value of the project : All principal will be repaid in one balloon payment at the end of the fourth year. What is the adjusted present value (APV) of the project?
Academic and scholarly journal articles : A research topic must be selected and at least 12 academic/scholarly journal articles should be summerised in an annotated bibliography format.
Current rate be on two-year treasury securities : One-year Treasury bills currently earn 4.95 percent. what should the current rate be on two-year Treasury securities?
What will be the price of the eight-year bond : What will be the price of the 8-year bond if its yield increases to 7.50%. What will be the price of the 30-year bond if its yield increases to 7.50%?
What are portfolio weights of each stock : An investor owns $8,500 of Adobe systems stock, $9,500 of Dow Chemical, and $9,500 of office Depot. What are the portfolio weights of each stock?
The hospital is independent non-profit entity : John Smith just founded the Hospital for Toys and Puppets. The hospital is an independent non-profit entity.
What is the current rate on ten-year corporate bond : The Wall Street Journal reports that the current rate on 10-year Treasury bonds is 7.65 percent, what is the current rate on a 10-year corporate bond.
Considering an upgrade to their facilities : Seattle Dairy Meat Processing, Inc. is considering an upgrade to their facilities. What is the NPV of this project?

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the free cash flow generated

Ajax Ltd reported Net Income of $435m in 2013, after providing for $186m in tax at a rate of 30%. Interest Expense was $56m and Depreciation was $32m. Calculate the free cash flow generated by Ajax Ltd in 2013.

  What are the direct and indirect costs of bankruptcy

What are the direct and indirect costs of bankruptcy? Briefly explain each. Additionally, some firms have filed for bankruptcy because of actual or likely litigation-related losses. Is this proper use of the bankruptcy process?

  What would be your total dollar cost for these calls

What would be your total dollar cost for these calls, ignoring broker fees?

  What is the minimum number of bonds

The Copycat Firm wants to raise $10 million to expand its business. To accomplish this, it plans to sell 30-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 6%. What is the minimum number of bonds it must sell to raise the..

  What is the sales growth rate

The Company's financial statements for year 2525 show that year-end Total assets of $2,460 include Plant, property, & equipment (PP&E) of $2,100 . The assets are financed by Debt of $760 and Stockholders' equity of $1,700. The annual Sales equal $11,..

  What is the percentage return on collins shares

What is the NPV of the proposed Vineyard KFC restaurant, and your recommendation? - What is the percentage return on Collins' shares for the year 2015?

  Describes relationship between bondholders and stockholders

Which one of these best describes the relationship between bondholders and stockholders at a time when it appears the firm may be facing increased financial distress?

  Real estate adventures and contracting expects sales

Real Estate Adventures & Contracting expects sales next year to be $3,000,000 if the economy is strong, $1,800,000 if the economy is steady, and $500,000 if the economy is weak. What is the expected level of sales for next year?

  Subsidiary x sells 10000 units to subsidiary y annually the

subsidiary x sells 10000 units to subsidiary y annually. the marginal income tax rate for subsidiary x is 30 and the

  Cost trade-offs in short-term financial management

Cost Trade-Offs in Short-Term Financial Management Geet Industries wants to install a just-in-time (JIT) inventory system in order to significantly reduce its in-process inventories. The annual cost of the system is gauged to be $91,000.

  What is annual carrying costs of post card inventory

Post Card Depot, an large retailer of post cards, orders 6,509,060 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 6 times over the next year. Post Card Depot receives the same number of post cards each time it ..

  What rate of return do you expect to earn on your investment

Suppose that today you buy a 5.6% annual coupon bond for $930. The bond has 10 years to maturity. What rate of return do you expect to earn on your investment?

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