All coupons were immediately spent when received

Assignment Help Financial Management
Reference no: EM13878793

8 years ago you purchased a 6 percent coupon bond for $945. Today you sold your bond for its face value of $1,000. Coupon payments are made annually. What is your rate of return on the bond in each of the following situations: a) all coupons were immediately spent when received. b) all coupons were reinvested in your bank, which pays 2 percent interest until the bond is sold. c) all coupon were reinvested at 6.4 percent until the bond is sold.

Reference no: EM13878793

Questions Cloud

Monthly maximum monthly amount you could withdraw : You would like to retire with $2,129,728 at age 62. If these funds earn a rate of 7%/yr, what is the maximum you can withdrawal each year if you expect to live to 86? If this annual rate is compounded monthly, what would be the monthly maximum monthl..
Assume the net working capital will be recovered at the end : Kinky Copies may buy a high-volume copier. The machine costs $210,000 and will be depreciated straight-line over 5 years to a salvage value of $38,000. Kinky anticipates that the machine actually can be sold in 5 years for $49,000. The firm’s margina..
Comment on the liquidity and profitability performance : Analyse and comment on the liquidity and profitability performance of the selected company from the point of view of management, based on the financial statements for years 2008 to 2010.
The valuation of a mature publicly traded firm is easy : The valuation of a mature publicly traded firm is easy - - just look up the stock price and multiply by the shares outstanding. For a start-up, there is no public price. You must calculate the present value of the anticipated net cash flows, discount..
All coupons were immediately spent when received : 8 years ago you purchased a 6 percent coupon bond for $945. Today you sold your bond for its face value of $1,000. Coupon payments are made annually. What is your rate of return on the bond in each of the following situations: a) all coupons were imm..
Examine the contribution of zero-based budgets : Examine the contribution of each of the following in improving efficiency in such organisations: zero-based budgets and  planned programme budget systems.
Find holding-period return for one-year investment period : A newly issued bond pays its coupons once a year. Its coupon rate is 4.9%, its maturity is 10 years, and its yield to maturity is 7.9%. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6..
Solve dp problem to help farmer to maximize expected profit : Formulate and solve it as a DP problem to help the farmer to maximize his expected profit.
How would you suggest fair & lovely promote its product : In light of AIDWA's charges, how would you suggest Fair & Lovely promote its product? Discuss. Would your response be different if Fairever continues to use ‘fairness' as a theme of its promotion? Discuss

Reviews

Write a Review

Financial Management Questions & Answers

  Is Ds right to that amount includable in Ds gross estate

D’s employer owed D $1,500 in salary that had not been paid at time of death. Is D’s right to that amount includable in D’s gross estate? What if the $1,500 is a benefit that D’s employer agreed to pay to D or D’s estate only if D continued to work f..

  Using the time value of money-concepts

Assume you have the following situations. Using the time value of money (TVM) concepts (formulas or tables) calculate the correct amount in each situation.

  What is the interim incremental net cash flow

Project grow will result in an increase of 5,000 units per year at a sale price of $ 11. each (assume 0% inflation). The additional sales will generate additional operating expenditures of 9. Per unit plus 3,000 in fixed operating cost. What is the i..

  Market value of equity equals gross proceeds from offering

Red Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share ..

  Falling forest products plans on paying dividends

Falling Forest Products LLC will end 2014 with a net profit before tax of $400,000. The company is subject to a 40% federal plus state income tax rate, and has 100,000 shares of cumulative preferred stock that normally pay 40 cents per share per year..

  Calculate the effective annual rate

Bright star bank pays a nominal annual interest rate of 11.36 percent compounded quarterly on your savings account. Calculate the effective annual rate or EAR (answer plus units) round 2 decimal places

  Rates expected to remain at current levels on into future

McCue Inc.'s bonds currently sell for $1,200. They pay a $90 annual coupon, have a 25-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and r..

  Se straight-line depreciation to zero over the projects life

You are evaluating two different silicon wafer milling machines. The Techron I costs $213,000, has a three-year life, and has pretax operating costs of $54,000 per year. The Techron II costs $375,000, has a five-year life, and has pretax operating co..

  Why did you choose this particular model

Why did you choose this particular model? Support your decision and what other issues would you consider when selecting a bank with the intent to do business?

  The interest had compounded annually

Beatrice invests $1,410 in an account that pays 3 percent simple interest. How much more could she have earned over a 4-year period if the interest had compounded annually?

  Companys shares on best efforts basis

Goode Investment Bank agrees to underwrite 1,000,000 CFS Company’s shares on a best efforts basis. It then sells 800,000 shares to the public for $20 each. The agreement is that Goode will charge 1.50 per share sold. How much money does CFS receive? ..

  Salary increases at an average annual rate

Upon graduating from college, you make an annual salary of $31,546. You set a goal to double it in the future. If your salary increases at an average annual rate of 6.48 percent, how long will it take you to reach your goal?

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