Making the assumption of no compounding interest

Reference no: EM13685285

Making the assumption of no compounding interest, Presume you purchase a perpetuity bond from Lateralus Inc. for $4,000 with an annual coupon rate of three percent. Specify all answers to the nearest dollar, and assume a discount rate equal to that of the current interest rate. What is the yearly return on your $4,000 investment? Changes in the economy push interest rates up from 3% to 5%. For how much can you sell your bond following this change in market interest rates? Presume that interest rates instead change from 3% to 1%. For what price will you be able to sell your bond following this change in market interest rates?

Reference no: EM13685285

Questions Cloud

Assuming neither supply nor demand curves is horizontal : Assuming neither supply nor demand curves is horizontal, in which of the following cases must price always fall?

Equilibrium real gdp in a country rose steadily : Presume that during the past three years, equilibrium real GDP in a country rose steadily, from $450 billion to $500 billion, however even though the position of its aggregate demand curve remained unchanged, its equilibrium price level steadily decl..

Open market operations in expansionary monetary policy : A Restrictive monetary policy by the Fed must lead to: A primary goal of monetary policy is to: The major tools of monetary policy available to the Federal Reserve System involve: When the Federal Reserve uses open market operations (OMO) in an expan..

The demand curve for digital rock music albums unchanged : If the position of the demand curve for digital rock music albums unchanged, what can account for a continuing rise in the market clearing price? explains why album prices have been rising what can you predict is likely to happen to revenues from alb..

Making the assumption of no compounding interest : Making the assumption of no compounding interest, Presume you purchase a perpetuity bond from Lateralus Inc. for $4,000 with an annual coupon rate of three percent. Specify all answers to the nearest dollar, and assume a discount rate equal to that o..

Describe why you classified the company as a monopoly : "Monopoly" Please responds to the following: Identify a company in your local area that you would classify as a monopoly. Describe why you classified the company as a monopoly and state how the company relates to at least two characteristics of that ..

Define microsoft as a monopoly : Microsoft has been a giant in the software industry. Can we define Microsoft as a monopoly? Please describe. In addition, whether the Learner Index works well to define the market power for Microsoft in the software industry? Describe your answer.

Engine vibration lab assignment : Engine Vibration lab assignment!

What is the implied price of the carrier in trade : Presume a country can produce a maximum of 5,000 jumbo airliners or 1,000 aircraft carriers. What is the opportunity cost of an aircraft carrier? What is the implied price of the carrier in trade?

User Account

All Pages