Calculate present value-current yield-interest rates bonds, Financial Accounting

Assignment Help:

Present Value of a Bond

1. Assume that you wish to purchase a 20 year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40.  If you require a 10% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Current Yield of a Bond

2. Consider a $1,000 par value bond with a 7% annual coupon.  The bond pays interest annually.  There are 9 years remaining until maturity.  What is the current yield on the bond assuming that the required return on the bond is 10%?

Change in Interest Rates of Bond

3. A bond has a $1,000 face value, coupon rate of 7% with semiannual payments.  Assume that the investors require a rate of return of 8%, what is the present value of the bond?  Consider now that the investors require a rate of return of 10%, what is the new present value of the bond?  Assume there are 10 years remaining until maturity.

 

 

 

 


Related Discussions:- Calculate present value-current yield-interest rates bonds

Case study, Q. If a corporation declares a 10% stock dividend on its common...

Q. If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is a. Common Stock Dividends Distributable. b. Common St

Non-for-profit organization, Non-for-Profit Organization/Tax-Exempt Organiz...

Non-for-Profit Organization/Tax-Exempt Organization - An incorporated organization that exists for charitable or educational purposes, and from that its shareholders or trustees do

ACCOUNTING, Ask questiThe pre - closing general ledger trial balances at De...

Ask questiThe pre - closing general ledger trial balances at December 31,2019, for Baltimore company and its Atlanta tranche are shown belowon #Minimum 100 words accepted#

Determine annual operating cash flow, A 4 year project has an initial asset...

A 4 year project has an initial asset investment of 306600, and initial net working capital investment of 29200, and an annual operating cash flow of -46720. The fixed asset is ful

What is balance sheet, Q. What is Balance Sheet? Balance Sheet - Basic ...

Q. What is Balance Sheet? Balance Sheet - Basic FINANCIAL STATEMENT, generally accompanied by appropriate DISCLOSURES which describe the basis of ACCOUNTING used in its prepara

journal entries to record the issuance , Prepare journal entries to record...

Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases given below: a. Jackson Corporation

Record performance of the services, Robin Corporation accepted credit cards...

Robin Corporation accepted credit cards for $34,200 of services performed in October 2011.The credit card company charged a 3% service fee and paid Robin as soon as it received the

FNSD, Example of FNSD Inventory

Example of FNSD Inventory

Cost of equity and corporate taxes, 1. Firm L has debt with a market value ...

1. Firm L has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a rate of 5%, and its tax rate i

Write Your Message!

Captcha
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