An investor has two bonds in his portfolio

Assignment Help Financial Management
Reference no: EM131051642

An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in 18 years, while Bond S matures in 1 year.

Assume that only one more interest payment is to be made on Bond S at its maturity and that 18 more payments are to be made on Bond L.

What will the value of the Bond L be if the going interest rate is 4%? Round your answer to the nearest cent.

What will the value of the Bond S be if the going interest rate is 4%? Round your answer to the nearest cent.

What will the value of the Bond L be if the going interest rate is 8%? Round your answer to the nearest cent.

What will the value of the Bond S be if the going interest rate is 8%? Round your answer to the nearest cent.

What will the value of the Bond L be if the going interest rate is 11%? Round your answer to the nearest cent.

 

What will the value of the Bond S be if the going interest rate is 11%? Round your answer to the nearest cent.

Reference no: EM131051642

Questions Cloud

Austerity measures designed to restore financial solvency : Which of the following multilateral institutions often insists that a country follow "austerity measures" designed to restore financial solvency as a condition of receiving a loan? Which of the following multilateral institutions often insists that a..
Draw from memory a detail of a typical slab on grade : Why canÕt the surface be nished in one operation, instead of waiting for hours before nal nishing?
Nominal dollar amount of last withdrawal : The inflation rate over this period is expected to be 4 percent.How much can you withdraw each month from your account in real terms assuming a 25-year withdrawal period? What is the nominal dollar amount of your last withdrawal?
What are control joints and isolation joints : Explain the purpose and typical locations for each in a concrete slab.
An investor has two bonds in his portfolio : An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in 18 years, while Bond S matures in 1 year. What will the value of the Bond L be if the going interest rate is 4%? What will ..
What is the maximum level of accounts : What is the maximum level of accounts receiable that ALei can carry and have a 40 day average collection period? If ALei's current accounts receivable collection period is 50 days, how musch would it have to reduce its level of accounts receivable i..
Similar bonds with no allowance for inflation : What effect do you think the inflation-adjusted interest rate has on the cost of an I-bond in comparison with similar bonds with no allowance for inflation?
Relation to a corporate environment : Describe the selected topic in relation to a corporate environment. Analyze the roles and responsibilities in making these decisions for the organization. Explain how to monitor their performance.
What is the current value of the annuity : A 6-year annuity of twelve $5,400 semi-annual payments will begin 11 years from now, with the first payment coming 11.5 years from now. If the discount rate is 7 percent compounded monthly, what is the value of this annuity five years from now? If th..

Reviews

Write a Review

Financial Management Questions & Answers

  After-tax cost of debt without flotation cost

Gigawage Corp. is considering issuing a new 30-year debt isse that would pay an annual coupon of $85. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for a price equal to its par value. After-tax cost of debt wi..

  Mission is to develop a quality improvement plan

Your instructor will assign you to a team whose mission is to develop a quality improvement plan. The first step in developing your plan is to choose a quote that embodies the characteristics of your team. Share your quotes with the other members of ..

  Discussing the possibility of shortening the project

The schedule is something you will want to keep close watch on during the project. What are some examples of when you would want or need to reduce the project’s duration? Would there be any concerns you might want to consider when discussing the poss..

  Considering production of a lighted world globe

The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.30 above full cost. Management estimates that the variable cost of the globe will be $70 per unit and fixed costs per year will ..

  What price would you estimate for halliford stock

Halliford Corporation expects to have earnings this coming year of $2.63 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 49% of its earnings. It will then retain 23% ..

  What is the duration of a bond with two years

What is the duration of a bond with two years to maturity if the bond has a coupon rate of 7.2 percent paid semiannually, and the market interest rate is 5.2 percent?

  Plans to increase production at a rate

Cooling Tools, Inc. is currently producing 978 of small refrigerators per month but the company’s CEO plans to increase production at a rate of 7.60 percent per month until the firm is producing 5,555 of refrigerators per month. How many months will ..

  Capital budgeting requirements and pay the dividend

Technology has a capital budget of $850,000, it wants to maintain a target capital structure of 35% debt and 65% equity, and it also wants to pay a dividend of $400,000. If the company follows a residual dividend policy, how much net income must it e..

  Calculate the present value of estimate of cash flows

Calculate the present value of this estimate of cash flows (operating costs in nominal$) if the nominal MARR is 10%. PV= Please show your work. I calculated Real MARR as 5.77% but have no idea what to do next.

  Determine the net pretax benefit to peterson

Determine the net (pretax) benefit to Peterson of using wire transfers if annual sales are $15 million and $75 million.

  Discuss the different methods a multinational firm

Discuss the different methods a multinational firm can take in managing its foreign currency exposure.

  New issue of common stock-the required return

Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .63. It’s considering building a new $65.3 million manufacturing facility. If the tax rate is 38 percent, A new issu..

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