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

Calculate the book value of share, Thurston Howell IV is the sole heir to t...

Thurston Howell IV is the sole heir to the Howell Enterprise fortune. He does not participate in the business, preferring to tend to his comic book collection. He does however own

OPERATING CYCLE, APPLICABILITY OF THE OPERATING CYCLE IN VEGETABLE GROWING ...

APPLICABILITY OF THE OPERATING CYCLE IN VEGETABLE GROWING BUSINESS

Reconciliations, What is the best way of doing reconciliations of control a...

What is the best way of doing reconciliations of control accounts like Purchases Ledger Control vs Purchases Ledger and Sales Ledger Control vs Sales Ledger

Successive interest computations, Show that if an investment of P dollars d...

Show that if an investment of P dollars declines by 4% during a year , the balance at the end of the year is P(1-.04) that is P(.96) ?

What is primary financial purpose, Q. What is primary financial purpose? ...

Q. What is primary financial purpose? The primary financial purpose of a company is typically stated to be the maximisation of shareholder wealth and Sassone plc has declared p

Example of abc analysis, Illustration: Dinesh Limited is looking selective...

Illustration: Dinesh Limited is looking selective control for its inventories. By using the subsequent datas, prepare the ABC plan. Items                 A           B

Calculate current average cost of processing order, SF is a division of Sel...

SF is a division of Sell.com, an internet retailer. SF operates two large server farms, each of which is a set of interconnected computers and hard drives that are used to process

The aicpa''s mission, Will you please summarize this mission statement of A...

Will you please summarize this mission statement of AICPA'S "The AICPA's mission is to provide members with resources, information and leadership that enable them to provide val

Abraham maslow''s hierarchy of needs theory, Motivation is said to be an in...

Motivation is said to be an internal state that energises an individual to engage in certain types of behaviours. This process is triggered when the individual experiences certain

The maturity date of a note receivable, The maturity date of a note receiva...

The maturity date of a note receivable 1. Is the day of the credit sale 2. Is the day the note was signed 3. Is the day the note is due to be paid 4. Is the date of the first payme

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