Would your bond sell for a premium or a discount

Assignment Help Finance Basics
Reference no: EM131017640

There is an inverse relationship between bond prices and yields. This inverse relationship will be demonstrated by calculating bond prices to show that interest rates move inversely: if yields rise, then bond prices fall. Bonds will be sold either at a premium or a discount. With this in mind respond to the following question.

You currently own a 30 year Treasury Bond at 4% interest, paid semiannually. The market interest rates for like securities rose to 5%. Would your bond sell for a premium or a discount? Why? What would the market value of your bond be? Prove your answer by showing your work.

Reference no: EM131017640

Questions Cloud

What is the probability of the brown : The makers of the candy M&Ms report that their plain M&Ms are composed of 15% yellow, 10% red, 20% orange, 25% blue, 15% green, and 15% brown. Suppose you randomly select an M&M, what is the probability of the following- It is brown and It is red ..
Explain how each branch functions as a check and balance : Indicate the individuals or departments that are contained in each branch. Describe the functions of each branch. Explain how each branch functions as a check and balance for the other two branches.
What is probability she will be asian and have type o blood : A volunteer blood donor walks into a Red Cross Blood office. What is the probability she will be Asian and have Type O blood? What is the probability that a white donor will not have Type A blood?
How actions of executive have personally affected your life : Explain how and why the actions of the executive and/or judicial branches have personally affected your life. Fully respond to all parts of the question.
Would your bond sell for a premium or a discount : This inverse relationship will be demonstrated by calculating bond prices to show that interest rates move inversely: if yields rise, then bond prices fall. Bonds will be sold either at a premium or a discount. With this in mind respond to the fo..
Describe the possible outcomes for selecting one section : A student has to have an accounting course and an economics course the next term. Assuming there are no schedule conflicts, describe the possible outcomes for selecting one section of the accounting course and one of the economics course if there..
Write a paper on violent crimes in america : Write a paper on Violent crimes in america. Provide an explanation as to why the topic needs to be researched and the problems and challenges that exist.
Find the probabilities for observe a six : A die is to be rolled and we are to observe the number that falls face up. Find the probabilities for these events: Observe a 6 and Observe an odd number.
Draw a decision tree for the decision that buyu faces : Determine the range of values of the probability that SAEL will exercise its option, making the decision found in part c as optimal, and determine the expected value of perfect information about whether SAEL will exercise its option.

Reviews

Write a Review

 

Finance Basics Questions & Answers

  On the back of elises monthly statement she listed the

on the back of elises monthly statement she listed the following outstanding withdrawals 123 76.09 117400130 560.25

  What was days sales outstanding or average collection

Red Hot Chili's had annual credit sales of $800,000 over the past year. During that time, average receivables were $200,000. What was the days' sales outstanding or average collection period (ACP)?

  Risk preference-sensitivity analysis-capm

Discuss how the range is used in sensitivity analysis. Illustrate the meaning of each variable in the capital asset pricing model (CAPM) equation. What is the security market line (SML)?

  Compute a fair rate of return for intel common stock

Compute a fair rate of return for Intel common stock, which has a 1.2 beta. The risk free rate is 6 percent, and the market portfolio (New York Stock Exchange stocks) has an expected return of 16 percent.

  Konka inc is expecting cash inflows of 13000 11500 12750

kronka inc. is expecting cash inflows of 13000 11500 12750 and 9635 over the next four years. what is the present

  1 the purtell animal welfare society paws boards stray

1. the purtell animal welfare society paws boards stray animals.nbsp they also provide veterinary checkups to ensure

  Objective type questions on bond valuation and wacc

Objective type questions on bond valuation and WACC and project evaluation and find the relative risk of a proposed project is best accounted for by

  Will a heavy operations-oriented company such as k-mart

Will a heavy operations-oriented company such as k-mart or Coles benefit by practicing CRM? Why or why not?

  A credit card issuer charges an apr of 1082 and its billing

a credit card issuer charges an apr of 10.82 and its billing cycle is 30 days long. what is its periodic interest

  The walker landscaping company can purchase a piece of

the walker landscaping company can purchase a piece of equipment for 3600. the asset has a two-year life and will

  Duration of the municipal notes

The following is an FI's balance sheet ($millions).

  What is the most they can pay for a new house

Ben remembers from finance class that the shorter the amortization period, the less total interest you will pay. Calculate how much interest they would save if they made monthly payments over a 20 year amortization rather than a 25 year amortiza..

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