Zero coupon bond offers is selling

Assignment Help Financial Management
Reference no: EM131336099

You find that the 3 year zero coupon bond offers is selling at a price of $758.33 and the 4 year zero coupon bond is selling at a price of $683.13........What is the forward rate from year 3 to 4 (the yield you will get if you invest in a 1 year bond from year 3 till 4)?

Reference no: EM131336099

Questions Cloud

Firm is considering project that will generate cash reveue : A firm is considering a new project that will generate cash revenue of $1,500,000 and cash expenses of $600,000per year for five years. The equipment necessary for the project will cost $275,000 and will be depreciated straight line over four years. ..
What do you do with irresponsible employees : Michelle Wong is manager of the Java Coffee House at a busy location on Union Street in San Francisco. Wong says that there are several challenges in operating a busy coffeehouse, such as training staff to handle unusual circumstances. How do you ens..
How much money do you have at the end of the ten years : Suppose you buy a 20 year 8% (annual payment) coupon bond for $990 and plan to hold it for 10 years. Your forecast is that the bond’s yield to maturity will be 8.5% when it is sold and that the re-investment rate on the coupons is 6%. At the end of y..
Two-year maturity bonds offer yields to maturity : Suppose that two-year maturity bonds offer yields to maturity of 6% and three-year bonds have yields of 7%. What is the inferred forward rate for the third year?
Zero coupon bond offers is selling : You find that the 3 year zero coupon bond offers is selling at a price of $758.33 and the 4 year zero coupon bond is selling at a price of $683.13........What is the forward rate from year 3 to 4 (the yield you will get if you invest in a 1 year bond..
Money in zero coupon bonds for the next two year : You want to invest your money in zero coupon bonds for the next two years. You find two alternative investments below...Which option would you opt for?
Firm uses only debt and equity in its capital structure : A firm uses only debt and equity in its capital structure. The firm's weight of debt is 40 percent. The firm could issue new bonds at a yield to maturity of 9 percent and the firm has a tax rate of 30 percent. If the firm's WACC is 11 percent, what i..
Firm uses only debt and equity in its capital structure : A firm uses only debt and equity in its capital structure. The firm's weight of equity is 70 percent. The firm's cost of equity is 13 percent and it has a tax rate of 30 percent. If the firm's WACC is 11 percent, what is the firm's before-tax cost of..
What actual annual return or yield : On July 21st 2016, you purchased the bond for $990 and then held it for one year, collecting its first coupon payment and then selling it immediately afterwards. If the Yield Curve did not change at all after July 21st 2016, then what actual annual r..

Reviews

Write a Review

Financial Management Questions & Answers

  Stock is expected to pay a dividend-calculate forward price

A stock is expected to pay a dividend of $2.20 per share in 1 months and in 4 months. The current stock price is $51, and the risk-free interest rate is 6% per annum with continuous compounding for all maturities. An investor has just taken a long po..

  Coupon rate of new bonds be in order for issue to sell

Suppose XG is considering an expansion which it will finance through additional bond sales. Current outstanding XG bonds are selling for $1,148.77. These have a face value of $1,000, and a coupon of 8% and 10 years to maturity. If interest is paid se..

  What must the risk-free rate be

A stock has an expected return of 15.5 percent, a beta of 1.50, and the expected return on the market is 12.1 percent. What must the risk-free rate be?

  What are the major factors that influence the effective cost

What are the major factors that influence the effective cost of a term loan?- What institutions are the primary suppliers of business term loans?

  What is the present worth equivalent cost to the contractor

A grader costs $350,000 to purchase and is expected to have a useful life of 8 years. Annual operating and maintenance costs are estimated to be $35,000 per year, and the salvage value after 8 years of use is estimated to be $50,000. At an interest r..

  Any required organizational change management strategies

write a draft of no more than 1800 words of the strategic plan for your organization including the

  Find the expected return on the stock using the capm model

CAPM is one of the more popular models for determining the risk premium on a stock. If the Expected Return on the Market Portfolio is 9.10%, the Risk-Free Rate is 2.0%, and the Beta for Stock i is 0.9. Find the Expected Return on the Stock using the ..

  What is the effective annual rate on this loan

You have just purchased a new warehouse. To finance the purchase, you arranged for a 30-year mortgage loan for 65 percent of the $2.5 million purchase price. The monthly payment on this loan will be $10,400. What is the effective annual rate on this ..

  Create riskless portfolio

A common stock will have a price of either $85 or $35 in 2 months. A two month put option on the stock has a strike price of $40. Create a riskless portfolio. Buy one put option. How many shares should you buy? Make sure that you show or explain all ..

  Residual model-dividends and payouts

The capital budget forecast for the Santo Company is $800,000. The CFO wants to maintain a target capital structure of 40% debt and 60% equity, and it also wants to pay dividends of $500,000. If the company follows the residual dividend policy, how m..

  What is percentage price change of these bonds

Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 8 percent. If interest rates suddenly rise by 2 percent, what is the percentage price ..

  What will be the break-even level of EBIT

GTB, Inc., has a 20 percent tax rate and has $86,196,000 in assets, currently financed entirely with equity. Equity is worth $6 per share, and book value of equity is equal to market value of equity. What will be the break-even level of EBIT?

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