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

Power system analysis, I need a project in Load impact in power flow((const...

I need a project in Load impact in power flow((constant power, constant impedance, constant current, induction motor). Report from 3 articles source and simulation in powerworld s

Electronics, square wave generator using op amp

square wave generator using op amp

Riser design, A riser or a feeder head is a passage of sand made in the cop...

A riser or a feeder head is a passage of sand made in the cope to permit the molten metal to rise above the highest point in the casting after the mould cavity is filled up. Risers

Ir receiver help, I am not getting proper infrared receiver for my mini pro...

I am not getting proper infrared receiver for my mini project so help for finding proper ir receiver..

SYSTEMS ENGINEERING, i need 3 areasof application of lunear programming

i need 3 areasof application of lunear programming

Corporate Finance, Will you take a timed online exam

Will you take a timed online exam

Vehicle kinematics, x(t)=integration((Vx(t)+Vy(t))/2*cos(theta)dt) where Vx...

x(t)=integration((Vx(t)+Vy(t))/2*cos(theta)dt) where Vx, Vy and theta is a function of t I am getting problem with how to write it down in matlab in order to get the position x.

Linear lateral dynamics, Linear lateral dynamics The second order (two ...

Linear lateral dynamics The second order (two degree of freedom) Dutch-Roll approximation is an approximation to the abovefourth order system for the Dutch Roll dynamics. A jus

Blending of metal powder, Q.5 Explain briefly the Blending of metal powders...

Q.5 Explain briefly the Blending of metal powders. Ans. Blending of Metal Powder:              The procedure of blending (mixing) powders is taken out for the followi

Fire protection test, Go to https://blackboard.newhaven.edu/ user: user:...

Go to https://blackboard.newhaven.edu/ user: user:Aaldo6 Pass:1992May239645 Class: fire 2209 Occup safety$ hilt-fire take the test its one hour test multiple choices its due t

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