User Account

All Pages

Help please, finance, Other Engineering

Assignment Help:
Judy Johnson is choosing between investing in two Treasury securities
that mature in five years and have par values of $1,000. One is
a Treasury note paying an annual coupon of 5.06 percent. The other
is a TIPS which pays 3 percent interest annually.

a.If inflation remains constant at 2 percent annually over the
next five years, what will be Judy’s annual interest income
from the TIPS bond? From the Treasury note?
If inflation over the next five years is 2%, the principle value rises to $1000 plus 2% or $1,020. The effective interest, what we are effectively earning on the tips with the inflation, is 5.06% - 2% = 3.06%. Judy’s annual interest income from the TIPS bond = 1000 x 0.02 x 5 = $100
Judy''s annual interest income from the TIPS bond
First year: value: 1020 interest 30.6
Second year: value: 1040.4 interest: 31.21
Third year: value: 1061.21 interest: 31.84
Fourth year value: 1082.43 interest: 32.47
Fifth year value: 1104.08 interest: 33.12

Judy''s annual interest income from the Treasury note
First year: value: 1020 interest 51.61
Second year: value: 1040.4 interest: 52.64
Third year: value: 1061.21 interest: 53.70
Fourth year value: 1082.43 interest: 54.77
Fifth year value: 1104.08 interest: 55.87

b. How much interest will Judy receive over the five years from
the Treasury note? From the TIPS?
Interest from Treasury note: 205.76
Interest The TIPS: 333.95

c. When each bond matures, what par value will Judy receive
from the Treasury note? The TIPS? If the bond matures 3 %, then Judy should receive a value of $30.00
$.03 % x $1,000 = $30.00

d. After five years, what is Judy’s total income (interest par)
from each bond? Should she use this total as a way of deciding
which bond to purchase?

Related Discussions:- Help please, finance

Structural engineering question, I have a 30'' simple span beam, braced at ...

I have a 30'' simple span beam, braced at the supports only. Uniform load is 1200 plf. I need deflection limited to L/400. What size steel beam do I need?

P d c, what are clippers

what are clippers

Microwaves and radars, what is pin daiode?

what is pin daiode?

Finite Element Analysis Assignment, Need help using FEA/FEM software (MSC M...

Need help using FEA/FEM software (MSC Marc/Mentat) to model and analyze a system,then write a lab report about it, it is due tomorrow... anything you can do for me?

Automatic interior car lights control, hi there, i need to know if its poss...

hi there, i need to know if its possible to create a circuit of automatic interior car lights control

Aerospace engineering, Define the aircraft axes & degrees of freedom. Analy...

Define the aircraft axes & degrees of freedom. Analyse the different maneuvers that can be done by an aircraft.

Electrical ice protection systems, Electrical ice protection systems: E...

Electrical ice protection systems: Electrical ice protection systems are used on most turbo-props.  Resistance wire heater elements are embedded in rubber and cemented from the

Metallurgy assignment, Hi I need someone to help me to do a metallurgy assi...

Hi I need someone to help me to do a metallurgy assignment

Capital management solutions, Objective of corporate financing Corporat...

Objective of corporate financing Corporate finance control is a division of financial that refers to the control of money of an organization. The attention of corporate financi

GSM BASED MOTOR ON AND OFF, in this project i want to start my motor by giv...

in this project i want to start my motor by giving a miscall so how can i decode that miscall in micro controller?

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd