Bond valuation-what is the yield to maturity on the bond

Assignment Help Financial Management

Reference no: EM13976555

1) (Bond valuation) National Steel 17-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $1,100, and the markets required yield to maturity on a comparable-risk bond is 6 percent. a. Compute the bond’s expected rate of return. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond?

2) The Saleemi Corporation's $1,000 bonds pay 11% interest annually and have 11 years until maturity. You can purchase the bond for $1,115. A. what is the yield to maturity on the bond? The yield to maturity on the Saleemi bond is what __%. (Round to two decimal places) B. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 11%?

Reference no: EM13976555

Questions Cloud

Her investments have an average annual return : Stacey would like to have $1 million available to her at retirement. Her investments have an average annual return of 11%. If she makes contributions of $300 per month, will she reach her goal when she retires in 30 years?

What was its charge for depreciation and amortization : Pearson Brothers recently reported an EBITDA of $13.5 million and net income of $3.9 million. It had $2.0 million of interest expense, and its corporate tax rate was 35%. What was its charge for depreciation and amortization?

Planning to invest in mutual fund : Chuck Tomkovick is planning to invest $22,000 today in a mutual fund that will provide a return of 11 percent each year. What will be the value of the investment in 10 years?

About the certificate of deposit : Kyle has $1,000 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate of deposit (CD) so that he will have a down payment on a car when he graduates from college in five years. His bank will ..

Bond valuation-what is the yield to maturity on the bond : (Bond valuation) National Steel 17-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $1,100, and the markets required yield to maturity on a comparable-risk bond is 6 percent. Compute the bond’s expected r..

Representative of the foreseeable future : Malfoy Corporation paid a $3.00 dividend per share this year. Its total earnings per share were $6.00. Malfoy’s book equity is $60 million. There are 1 million shares outstanding and the discount rate for Malfoy stock is 12%.(a) What is the growth ra..

Present and future values of a cash flow stream : An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $550 at the end of Year 6. If other investments of equal risk earn 10% annually, what is its present value? If other investm..

What is your effective annual rate of return : Calculating Returns (CFA1) Looking back at Problem 12, suppose the call money rate is 5 percent and your broker charges you a spread of 1.25 percent over this rate. You hold the stock for six month and sell at a price of $65 per share. What is your e..

Research the concept of dashboard reporting : Jim Jones has recently been appointed to the Board of Directors of Youngstown Medical Center, a 300 bed nonprofit community hospital. He is reviewing the financial package that was sent to him that includes 28 pages of financial information consistin..

User Account

All Pages