What is the current market value of the bond

Assignment Help Finance Basics
Reference no: EM132183874

Question - Rick bought a 30-year old bond when it was issued by Macroflex Corporation 15 years ago. The bond has $1,000 face value and a coupon rate equal to 7% and the coupon is paid every six month. If the yield on similar-risk investments is 8%.

a) What is the current market value (price) of the bond?

b) Suppose the interest rate levels rise to the point where such bonds now yield 10%. What would be the price of Macroflex bond?

c) At what price would Macroflex bonds sell if the yield on them was 5%?

d) What do you observe regarding the relationship bet interest rate (YTM) bond's price?

e) What do you observe regarding the relationship between coupon, YTM, and the bond's price?

Reference no: EM132183874

Recommend the expected value of the company

Recommend the expected value of the company within one year, with and without expansion and justify whether the company's stockholders be better off with or without the expa

What was the company operating income

New Mexico Lumber recently reported that its earnings per share were $ 5 .00. The company has 6 00,000 shares of stock outstanding. The company's interest expense was $ 3 00

Calculate the other party''s final cost

"Another company would be willing to pay our company a floating rate payment priced at 3-month Libor+25bp, while our company would have an obligation to pay a fixed rate of 5.

Initial price of a swaption that matures at time

Compute the initial price of a swaption that matures at time t=5 and has a strike of 0. The underlying swap is the same swap as described in the previous question with a not

Scholarship fund for students at clever college

You wish to establish a scholarship fund for students at Clever College. The fund wouldpay an annual scholarship that would start at $5,000 awarded one year from now andincr

How much more life insurance does janet need

If Jane were to die, her daughter would receive $14,400 annually for 12 years from Social Security. She is also the primary beneficiary of Janet's $100,000 group life policy

Should speculators use currency futures or options

Should Speculators Use Currency Futures or Options? Point Speculators should use currency futures because they can avoid a substantial premium. To the extent that they are wil

Approach looks at future needs of dependents

Which of the following statements regarding life insurance needs is / are correct? 1. The human life value approach looks forward for information. 2. The capitalization of i


Write a Review

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