Reference no: EM131332648
STOCKS AND BONDS
Bond Valuation
This assignment contains two parts: Part I and Part II.
Part I
Answer these questions and show your work:
- Assume that the company that you selected for the Module 1 SLP has a bond outstanding that matures in 20 years and has a coupon rate of 6.5%. The par value of the bond is $1,000.
- If the yield to maturity is 8% and the bond pays interest on an annual basis, what's the current price of the bond? Is the bond selling for a premium or discount? How can you tell?
- If the yield to maturity is 8% but the bond pays interest on a semi-annual basis instead of an annual basis, what's the current price of the bond? Is it different from the value when using annual compounding? Explain.
- Now, assume that the economy enters into a recession and interest rates fall. The bond's yield to maturity is now 5%. What's the bond's new price? How does the price compare with your answer in part a? Why did the bond's value change?
- A bond matures in ten years and is currently selling for $1,125. The bond pay interest annually, has a par value of $1,000, and a yield to maturity of 10.75%. What's the bond's current yield?
Part II:
Write a 2-page essay comparing reinvestment risk and interest rate risk and how an investor can protect his or her portfolio from those risks. Please be sure to discuss duration in your paper.
SLP Assignment Expectations
You are expected to:
- Describe the purpose of the report and provide a conclusion. An introduction and a conclusion are important because many busy individuals in the business environment may only read the first and the last paragraph. If those paragraphs are not interesting, they never read the body of the paper.
- Answer the SLP Assignment question(s) clearly and provide necessary details.
- Write clearly and correctly-that is, no poor sentence structure, no spelling and grammar mistakes, and no run-on sentences.
- Provide citations to support your argument and references on a separate page. (All the sources that you listed in the references section must be cited in the paper.) Use APA format to provide citations and references.
- Type and double-space the paper
Whenever appropriate, please use Excel to show supporting computations in an appendix, present financial information in tables, and use the data computed to answer follow-up questions. In finance, in addition to being able to write well, it's important to present information in a professional manner and to analyze financial information. This is part of the assignment expectations and will be considered for grading purposes.
|
Estimate of the mean daily income
: Construct a 90% confidence interval estimate of the mean daily income this parking garage generates. Show all work. Just the answer, without supporting work, will receive no credit.
|
|
Describe how race and gender shape a persons life
: we saw how powerful race and gender are in defining our identities. Despite advances towards equality, racism and sexism continue to exist in our society. Thinking about these ideas, describe how race and gender shape a person's life. Which is ..
|
|
Percent confidence interval for the percentage
: In each of 4 years a random sample of 100 voters (different each year) are asked if they support a political party. The numbers each year who support the party are 41, 32, 35, and 33. (a) Give a 95 percent confidence interval for the percentage w..
|
|
Why it is important to understand the different needs
: In paragraph form, explain why it is important to understand the different needs of the different stakeholder groups for each functional area
|
|
Write a two-page essay comparing reinvestment risk
: Write a two-page essay comparing reinvestment risk and interest rate risk and how an investor can protect his or her portfolio from those risks. Please be sure to discuss duration in your paper.
|
|
Confidence interval for the percentage
: In a random sample of 63 students in 2000, 3 got first class honours. A random sample of 42 is conducted in 2009 and 7 got firsts. (a) Give a 95 percent confidence interval for the percentage who got firsts in 2000.
|
|
Create at least five interview questions related to racism
: Choose a person to interview. This person should have experience with race, gender, and/or occupational stratification, either as a human resources manager, a hiring manager, or someone similar, OR you may choose someone who personally experienced..
|
|
What kind of data different user groups would likely require
: Why the reports should be integrated, using the very same data? What kinds of data different user groups would likely require? What system features will be needed specifically to address e-business needs?
|
|
Normal distribution of fish lengths
: Use the normal distribution of fish lengths for which the mean is 8 inches and the standard deviation is 5 inches. Assume the variable x is normally distributed.
|