Calculate present value-current yield-interest rates bonds, Financial Accounting

Present Value of a Bond

1. Assume that you wish to purchase a 20 year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40.  If you require a 10% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Current Yield of a Bond

2. Consider a $1,000 par value bond with a 7% annual coupon.  The bond pays interest annually.  There are 9 years remaining until maturity.  What is the current yield on the bond assuming that the required return on the bond is 10%?

Change in Interest Rates of Bond

3. A bond has a $1,000 face value, coupon rate of 7% with semiannual payments.  Assume that the investors require a rate of return of 8%, what is the present value of the bond?  Consider now that the investors require a rate of return of 10%, what is the new present value of the bond?  Assume there are 10 years remaining until maturity.

 

 

 

 

Posted Date: 2/16/2013 2:38:53 AM | Location : United States







Related Discussions:- Calculate present value-current yield-interest rates bonds, Assignment Help, Ask Question on Calculate present value-current yield-interest rates bonds, Get Answer, Expert's Help, Calculate present value-current yield-interest rates bonds Discussions

Write discussion on Calculate present value-current yield-interest rates bonds
Your posts are moderated
Related Questions
The three certainties A trust will be valid only if the three certainties are present i.e. certainty of words, certainty of subject, and certainty of objects.   1. Certainty

Much of the supply-side, fiscally conservative economic policies of Margaret Thatcher, Ronald Reagan, and even Mike Harris in Ontario were predicated on the belief that high income

what managers should know about internal rate of return( IRR) and why

Questikon: For Period Wilson Ltd has produced the following budget figures for Product X: For the period, the budgeted fixed overhead is Rs100,000 and the budgeted sales ar

Question 1: (a) "MTEF is about resource control, resource allocation and resource utilization." You are required to identify and discuss the different stages of MTEF. (N

Suppose that the real risk-free rate, r*, is 4% and that inflation is usual to be 8% in Year 1, 5% in Year 2, and 4% thereafter. Suppose also that all Treasury securities are highl

the salaries paid in 2004 is rs. 500000 salaries outstanding is rs.20000 salaries paid in advance for 2004 is rs 30000 what is the actual salary expenditure for 2004?

Q. Prior period adjustments a. may only increase retained earnings. b. may only decrease retained earnings. c. may either increase or decrease retained earnings. d. do not affect r

Business start up accounting transactions: Jane Whitfield, a sole proprietor, established the JW Flower Shop on January 2, 2010. The following transactions have occurred during

explain the terms recording,classifying,summarizing and communicating