Calculate the value of bond

Assignment Help Financial Management

Reference no: EM13879704

A bond of the Eastold Corporation pays an 11% coupon and has a $1000 par value. The coupon is paid semi-annually (twice a year). The bond matures in 10 years. The market's required yield to maturity on a comparable-risk bond is 9%.

a. Calculate the value of a bond. (8p)

b. How does the value change if the market's required yield to maturity increases to 12%?(8p)

c. How does the value change if the market's required yield to maturity decreases to 6%?(8p)

d. d) Interpret your findings in parts a), b)and c).(4p)

Reference no: EM13879704

Questions Cloud

Breathing properly requires the presence : Breathing properly requires the presence of what compound that affects surface tension of alveoli in the lungs? A. Potassium B. Plasma C. Surfactant D. Sodium Chlorid

Standard deviation of that starting salary : You have chosen biology as your college major because you would like to be a medical doctor. However, you find that the probability of being accepted into medical school is about 10 percent. Without considering the additional educational years or the..

How many of type should be made daily to maximize net profit : If each SUV sold results in a $2,000 loss but each sedan produces a $5,000 profit, how many of each type should be made daily to maximize net profits?

Considering the buyout of an existing publicly traded : For this discussion, assume that you are an investor and considering the buyout of an existing publicly traded company. There are several areas you plan to focus on during your due diligence process in order to determine the organization's potential ..

Calculate the value of bond : A bond of the Eastold Corporation pays an 11% coupon and has a $1000 par value. The coupon is paid semi-annually (twice a year). The bond matures in 10 years. The market's required yield to maturity on a comparable-risk bond is 9%. Calculate the valu..

Explain what these sensory deficits : Ms. Carter suffered a head injury in a motor vehicle crash. She injured her right ear, her right occipital lobe, her right temporal lobe, and parts of her diencephalon. She has the following sensory deficits: hyposmia, inability to hear high-frequenc..

Enable michele to achieve her investment requirement : In order to fund her retirement, Michele requires a portfolio with an expected return of 0.10 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock..

The functional unit of the kidney : The functional unit of the kidney is known as? A. Medulla B. Glomerulus C. Pyramid D. Nephron

Returns and probabilities for the three possible states : Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.13 and 0.16, respective..

User Account

All Pages