Annual compounding and semiannual compounding

Assignment Help Financial Management

Reference no: EM131875919

1. Given the following: default premium = 0.50 % pts.; inflation 3.75%; real rate = 1.25%; maturity premium = 1.15% pts., what would be the nominal rate?

2. Thirteen years ago a firm issued $1,000 par value bonds with a 5% annual coupon rate and a term to maturity of 20 years. Market interest rates have decreased since then and similar bonds today would carry an annual coupon rate of 4%. What would these bonds sell for today if they made (a) annual coupon payments; and (b) semiannual coupon payments?

3. Eight years ago you purchased a $1,000 30-year zero coupon bond for $575. What was the annual YTM on that bond at that time using (a) annual compounding; and (b) semiannual compounding?

4. For the zero-coupon bond in #9 above, if the annual rate on similar bonds is now 7%, what could you sell your bond for today assuming (a) annual compounding; and (b) semiannual compounding?

Reference no: EM131875919

Questions Cloud

Required yield to maturity on comparable-risk bond : Calculate the value of the bond. How does the value change if the? market's required yield to maturity on a? comparable-risk bond? (i) increases to 13 percent

Discuss three commonalities between stocks and bonds : Discuss three commonalities between stocks and bonds AND Discuss three differences. If you were a business owner, would you prefer to issue stocks or bonds.

Explain the managerial issues of a networked organization : Explain the Managerial issues of a networked organization, Emerging enterprise network applications and Mobile computing and its business implications.

What can ofc lightly learn by looking at these elements : OFC Lightly decided to enlarge his scope to expand his plan to the whole community, whether or not its members have been victims of property crime.

Annual compounding and semiannual compounding : What was the annual YTM on that bond at that time using (a) annual compounding; and (b) semiannual compounding?

How does the organization address cultural differences : How does the organization address cultural differences? Alternatively, how would you recommend these approaches be modified?

Prepare the income statement for star company : The following information for Star Company - Retained earnings (July 1) $12,000. Prepare the Income statement for Star Company

Write grant writing guide that incorporates writing process : Create a 1,050- to 1,750-word grant writing guide that incorporates the most important parts of the grant writing process from beginning to end.

What will be their optimal upper cash limit : purchase of marketable securities to be $220 per transaction. What will be their optimal upper cash limit?

User Account

All Pages