What would be the value of the zero-coupon rate bond

Assignment Help Financial Accounting
Reference no: EM132987226

A 20-year, $1,000 par value zero-coupon rate bond is to be issued to yield 7 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Problem a. What should be the initial price of the bond? (Assume annual compounding. Do not round intermediate calculations and round your answer to 2 decimal places.)

Problem ?b. If immediately upon issue, interest rates dropped to 6 percent, what would be the value of the zero-coupon rate bond? (Assume annual compounding. Do not round intermediate calculations and round your answer to 2 decimal places.)

Reference no: EM132987226

Questions Cloud

What is return rate that bond investors are seeking : The United States treasury bond rate is 2.75% and Jones's beta is 0.90. Jones's tax rate is 25%. What is return rate that bond investors are seeking form Jones?
Explain the three general types of error : describe and explain the three general types of error that can occur in problem-solving. Give examples.
Required to normalise the data on the unnormalised worksheet : Good Fortune Restaurant Supplies (GFRS) is owned by Anna Vuong, Required to normalise the data on the unnormalised worksheet provided
Manufacturers and end-customers : Analyze the relationship between manufacturers and end-customers.
What would be the value of the zero-coupon rate bond : What would be the value of the zero-coupon rate bond? (Assume annual compounding. Do not round intermediate calculations and round your answer)
What is the effective yield to maturity : What is the effective yield to maturity? Assume a zero-coupon bond that sells for $383 and will mature in 20 years at $2,150. Use Appendix B
Establishing sustainable supply chain operation : Discuss the difficulty of establishing a sustainable supply chain operation while trying to maintain a balanced triple bottom line.
What is the payout ratio for moon and sons inc : Moon and Sons Inc. earned $240 million last year and retained $110 million. What is the payout ratio? (Do not round intermediate calculations.)
By how much did the company retained earnings increase : By how much did the company's retained earnings increase? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000)

Reviews

Write a Review

Financial Accounting Questions & Answers

  Questions on construction costing and accounting

Questions on construction costing and accounting - complete the project. Using the percentage-of-completion method, Indiana

  Record the employer-provided fringe benefits

During January, Luxury Cruise Lines incurs employee salaries of $2.3 million. Record the employer-provided fringe benefits

  Which is one of the major active option exchanges

Which is one of the Major Active Option Exchanges? Why are Option Contracts important to the marketplace? They can greatly influence the equity markets

  What costs would be irrelevant

Prentice company is considering dropping one of its product lines what costs of the product line would be relevant to this decision? what costs would be irrelevant?

  Multiple choice questions on cost management basics1 the

multiple choice questions on cost management basics.1. the book value of an old machine is always considered a sunk

  Calculate the cost of equity capital for infosys

Calculate the cost of equity capital for Infosys, assuming that the Mumbai market is not integrated, and Infosys were only listed in its home market.

  Journalize the september transactions for reid supply

Journalize the September transactions for Reid Supply. Sept. 5 Purchased 70 backpacks at $20 each from Hunter, terms 5/20, n/30. FOB destination $ 150 was paid.

  Appropriate journal entries to record transactions

Prepare the appropriate journal entries to record the transactions for the year, including any year-end adjustments. Show calculations, rounded to the nearest dollar.

  Income statements for each company

Write a paragraph describing the difference between the two companies for 3 of the ratios calculated and prepare common-size and trend percentages for the income statements for each company.

  Why is airline profitability very sensitive to these cycles

Every airline has what is called a break-even load factor. That is the percentage of the seats the airline has in service that it must sell at a given yield, or price level, to cover its costs. Since revenue and costs vary from one airline to another..

  Why does the gaap not allow a company to use the percentage

Why does the GAAP not allow a company to use the percentage of sales and the percentage of receivables methods at the same time?

  Define and explain operational excellence

Compare and contrast operational excellence and strategic management; Provide an example that demonstrates the difference between these two concepts.

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