### Rate of return-what is your return over the six months

Assignment Help Financial Management
##### Reference no: EM131448556

You buy a 20-year bond with a coupon rate of 8.7% that has a yield to maturity of 9.7%. (Assume a face value of \$1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 10.7%. What is your return over the 6 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)

Rate of return %

### Previous Q& A

#### What is the likely bond price before the downgrade

A bond’s credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity of 7.6%. A-rated bonds sell at yields of 7.9%. Suppose that a 10-year bond with a face value of \$1,000 and a coupon rate of 7.1% is downg..

#### What interest rates do you prefer each payment plan

A business magazine is available for \$58 for 1 year, \$108 for 2 years, \$153 for 3 years, or \$230 for 5 years. Assume you will read the magazine for at least the next 5 years. For what interest rates do you prefer each payment plan?

#### What is the firms net working capital

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of \$5.0 million and net fixed assets equal \$1.87 million. It has notes payable of \$320,000, long-term debt of \$1,113,000, and ..

#### Explain meaning of final number you found from computation

The POP Corporation had sales of \$80 million in 2015. Costs other than depreciation and amortization were 60 percent of sales, and depreciation and amortization expenses were \$19.6 million. It had \$140 million debt with 3.5 % annual interest. Compute..

#### What percentage of the payment represents principal payment

Set up an amortization schedule for a \$12,000 loan to be repaid in equal instalments at the end of each of the next 3 years. The interest rate is 3 percent, compounded annually. What percentage of the payment represents interest payment and what perc..

#### Potential impact decision would have on firm profitability

Discuss the four possible capacity levels a firm must evaluate when deciding how to set budgeted fixed manufacturing cost rates, including the pros and cons of selecting each capacity level. Explain the potential impact this decision would have on fi..

#### Future value of an annuity

Your client is 23 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save \$8,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average return ..

#### Finding the required interest rate

Your parents will retire in 29 years. They currently have \$340,000 saved, and they think they will need \$1,950,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?

#### Effective rate of interest

Find the interest rates earned on each of the following. You borrow \$710 and promise to pay back \$781 at the end of 1 year. You borrow \$82,000 and promise to pay back \$293,821 at the end of 7 years.

#### Nominal rate does land bank offer on its savings accounts

On its savings accounts, the Gulf Bank offers a 2 percent nominal interest that is compounded monthly. Savings accounts at the Land Bank have the same effective annual return, but interest is compounded quarterly. What nominal rate does the Land Bank..

### Similar Q& A

#### Dividend-paying stock

You hold 100 shares of Harrington Motors, a dividend-paying stock, that generated a total return for 2012 of -5.05 percent. Which one of the following must be true?

#### Market value and the face value of the zero-coupon bond

You will be paying \$10,000 a year in education expenses at the end of the next two years. Currently the yield curve is flat at 8%. If you want to fully fund and immunize your obligation with a single issue of a zero-coupon bond, what maturity bond mu..

#### Considering leasing a new robotic milling control system

Your firm is considering leasing a new robotic milling control system. The lease lasts for 4 years. The lease calls for 5 payments of \$280,000 per year with the first payment occurring at lease inception. The system would cost \$900,000 to buy and wou..

#### What is the operating cash flow or OCF

Hamble, Inc., has sales of \$19,070, costs of \$10,460, depreciation expense of \$2,530, and interest expense of \$1,600. If the tax rate is 35 percent, what is the operating cash flow, or OCF?

#### The company will receive a tax credit as a result of sale

Mikes services is now at the end fo the final year of a project. The equipment orginally cost 22,500 of which 75% has been depreciaed. Mike can sell it today at 6000 and its tax rate is 40%. What is the equipment's after tax salvage value for use in ..

#### Dividend discount model-stock price

You expect Budweiser will pay dividends of 2.25 in one year, 2.50 in two years, and 2.75 in three years. From that point onwards, dividends will grow at 6% per year. Investors' required rate of return is 12%. According to the Dividend Discount Model,..

When confronted with runaway noninterest expense, management's first impulse is to cut costs. What are the advantages and disadvantages of this approach? What other approaches are possible?

#### Following activities will affect a bank''s required reserves

Which of the following activities will affect a bank's required reserves? a. The local Girl Scout troop collects coins and currency to buy a new camping stove. The troop deposits \$ 250 in coins and opens a small time deposit. b. You decide to move \$ ..

#### Traditional brick and mortar retailers are converging

Pure play Ecommerce sites will continue to outpace traditional stores and diverge not converge with brick and mortar. Many well respected individuals believe that Ecommerce and traditional brick and mortar retailers are converging. Discuss and ask qu..

#### Borrowed at the annual effective interest rate

To purchase a house, \$100,000 is borrowed at the annual effective interest rate i. The loan will be repaid by payments at the end of each month for 30 years. The monthly payments within each year are constant, but the monthly payments increase by \$10..

#### Income capitalization converts income to value equivalent

Small income properties are bought and sold only for their tangible amenities. Gross income multipliers normally increase with a decrease in the operating expense ratio. Rent for the manager's unit should be included in the rent forecast. Income capi..

#### Depreciation deduction and resulting unrecovered investment

A surface mount PCB placement/soldering line is to be installed for \$1.6 million. It will have a salvage value of \$100,000 after 5 years. Determine the depreciation deduction and the resulting unrecovered investment (adjusted basis) during each year ..