### What is the yield on two-year treasury securities

Assignment Help Finance Basics
##### Reference no: EM13974718

1. Jackson Corporation's bonds have 6 years remaining to maturity. Interest is paid annually, the bonds have a \$1,000 par value, and the coupon interest rate is 7.5%. The bonds have a yield to maturity of 11%. What is the current market price of these bonds? Round your answer to the nearest cent.

2. The real risk-free rate is 4%. Inflation is expected to be 1% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero.

a) What is the yield on 2-year Treasury securities? Round your answer to two decimal places.
b) What is the yield on 3-year Treasury securities? Round your answer to two decimal places.

3. The real risk-free rate is 3%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 8.8%. What is the maturity risk premium for the 2-year security?

4. Thatcher Corporation's bonds will mature in 20 years. The bonds have a face value of \$1,000 and an 12% coupon rate, paid semiannually. The price of the bonds is \$850. The bonds are callable in 5 years at a call price of \$1,050. Round your answers to two decimal places.

a) What is their yield to maturity?
B) What is their yield to call?

5. The Brownstone Corporation's bonds have 7 years remaining to maturity. Interest is paid annually, the bonds have a \$1,000 par value, and the coupon interest rate is 10%.

a) What is the yield to maturity at a current market price of \$858? Round your answer to two decimal places.
b) What is the yield to maturity at a current market price of \$1,154? Round your answer to two decimal places

6. A 30-year, 10% semiannual coupon bond with a par value of \$1,000 may be called in 4 years at a call price of \$1,100. The bond sells for \$1,050. (Assume that the bond has just been issued.)

a) What is the bond's yield to maturity? Round your answer to two decimal places.
b) What is the bond's current yield? Round your answer to two decimal places
c) What is the bond's capital gain or loss yield? Round your answer to two decimal places.
d)What is the bond's yield to call? Round your answer to two decimal places.

7. A bond that matures in 9 years sells for \$950.The bond has a face value of \$1,000 and a yield to maturity of 9.8764%. The bond pays coupons semiannually. What is the bond's current yield? Round your answer to two decimal places.

8. Assume that the real risk-free rate, r*, is 4% and that inflation is expected to be 8% in Year 1, 6% in Year 2, and 4% thereafter. Assume also that all Treasury securities are highly liquid and free of default risk. If 2-year and 5-year Treasury notes both yield 10%, what is the difference in the maturity risk premiums (MRPs) on the two notes; that is, what is MRP5 minus MRP2? Round your answer to two decimal places.

9. Because of a recession, the inflation rate expected for the coming year is only 3%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3%. Assume that the real risk-free rate is r* = 2% for all maturities and that there are no maturity premiums. If 3-year Treasury notes yield 2 percentage points more than 1-year notes, what inflation rate is expected after Year 1?

10. Renfro Rentals has issued bonds that have a 8% coupon rate, payable semiannually. The bonds mature in 11 years, have a face value of \$1,000, and a yield to maturity of 8.5%. What is the price of the bonds? Round your answer to the nearest cent.

#### What would be the total interest cost compared

What if interest rates on the 10 percent loan go up to 15 % in the second year and 18% in the third year? What would be the total interest cost compared to the 12%, three ye

#### Calculate patent amortization expenses

ELO Company purchased a patent for \$180,000 on September 1, 2006. It had a useful life of ten years. On January 1, 2008, ELO spent \$44,000 to successfully defend the patent in

#### Under what conditions lender willing to accept lesser amount

Assuming the borrower is in no danger of default, under what conditions might a lender be willing to accept a lesser amount from a borrower than the outstanding balance of a

#### What is the expected return of yerba stock after this

Suppose that prior to this transaction, Yerba expected earnings per share this coming year of \$1.50, with a forward P/E ratio (that is, the share price divided by the expected

#### Perceptions of project management

Write a 750- to 1050-word paper in which you describe a project you have managed personally or professionally. Examples may include planning a trip, developing a product, re

#### Future value and annuity payments

Christy and Michael are trying to decide if they will have enough money to retire early in 15 years, at age 60. Their current assets include \$250,000 in retirement plans and

#### Find the following values using the equations

Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. a. An initial \$500 compounded for 1 year at 6% b. An in

#### Operating breakeven point and financial breakeven point

LPM Corporation sells its product for \$10 each. Fixed operating costs equal \$100,000, and variable operating costs are 75 percent of the selling price. The firm pays \$37,500

### Write a Review 