Bonds of same maturity now sell to yield

Assignment Help Business Economics
Reference no: EM131424893

Zang international Chinese chemical company has a 15% annual coupon interest rate on a $1,000 par value bond with 20 years left to maturity. Bonds of same maturity now sell to yield 11% return.

(a) How much would you be willing to pay for one of these bonds today? Why?

(b) If the bond is selling for $ 1,141 what is the yield to maturity?

(C) Explain why some bonds sell at a premium over par value while other bonds sell at a discount. What do you know about the relationship between the coupon rate and the YTM for premium bonds? What about for discount bonds? For bonds selling at par value?

Reference no: EM131424893

Questions Cloud

Rule-of-law nations adopt laws supporting the private market : Rule-of-law nations adopt laws supporting the private market because it is in everyone’s interest, including the lawmakers.Common law relies more on legislation than judicial decisions to determine what the law is.
What law believes that law is simply the commands : What law believes that law is simply the commands of the state backed up by force and punishments? Which idea of law tries to go beyond just the words of law to examine what police, administrators, prosecutors, and judges are actually doing as they e..
Capital asset pricing model is value equity securities : The Capital Asset Pricing Model is used to value equity securities. If the calculated CAPM price deviates from the price a stock is currently trading for, this implies there is an opportunity to profit by either buying the stock or selling it short. ..
Cause leftward shift in long-run aggregate supply? curve : Which of the following will NOT cause a leftward shift in the? Long-Run Aggregate Supply? curve?
Bonds of same maturity now sell to yield : Zang international Chinese chemical company has a 15% annual coupon interest rate on a $1,000 par value bond with 20 years left to maturity. Bonds of same maturity now sell to yield 11% return. How much would you be willing to pay for one of these bo..
According to the new growth theory : According to the new growth theory
Social security and other pension plans : Mr. White is planning to take early retirement. He has decided that he needs dollar 15000 per year to live on, for the first 5 years of his retirement; after that, his Social Security and other pension plans will provide him an adequate retirement in..
The prices of the two goods remain unchanged : Angela consumes only two goods, x and y. Her income doubles and the prices of the two goods remain unchanged. Assuming that she is a utility maximizer and likes both goods,
What price will sellers receive after the tax : How much will the quantity demanded change from the amount demanded before the tax? what price will consumers pay after the tax? what price will sellers receive after the tax?

Reviews

Write a Review

Business Economics Questions & Answers

  Explain what is meant by the idea of optimum-size firm

Explain what is meant by the idea of an “optimum-size firm.” What forces would make firms in one industry on average larger than firms in another industry (e.g. grocery stores are generally much larger than beauty parlors)?

  Assume that the milk industry is competitive

Assume that the milk industry is competitive. Illustrate a long-run equilibrium using diagrams for the milk market and for a representative dairy.

  Determine the engineering economy symbols

Maintenance costs for a small bridge with an expected 50-year life are estimated to be $1000 each year for the first 5 years, followed by a $10000 expenditure in the year 15 and a $10000 expenditure in the year 30. If the maintenance operation is con..

  The annual income from an apartment complex

The annual income from an apartment complex is $20,836. The annual expense is estimated to be $2,463. The apartment complex could be sold for $144,351 at the end of 10 years. If your MARR is 10%, how much should you pay for the apartment complex if y..

  Determining extent and duration of frictional unemployment

Which one of these factors plays a role in determining the extent and duration of frictional unemployment?

  Was the wage freeze example of price floor or price ceiling

During World War II there was a freeze on wages, and corporations found they could evade the freeze by providing other fringe benefits such as retirement funds and health insurance for their employees. The Internal Revenue Service went along with thi..

  What is the price elasticity of demand for hot dogs

A hot dog vendor faces a daily demand curve of Q=1800-4p, where P is the price of a hot dog and Q is the number of hot dogs purchased each day. If the vendor has been selling 300 hot dogs each day, how much revenue has he been collecting? What is the..

  Manager of a local sporting goods store

You are the manager of a local sporting goods store and recently purchased a shipment of 60 sets of skis and ski bindings at a total cost

  Optimistic conclusion-with right legal-procedural safeguards

In "In Praise of Big Brother" (pp. 203-215), James Stacey Taylor argues for the optimistic conclusion that, with the right legal and procedural safeguards, large-scale governance surveillance would have many positive consequences. What are Taylor's b..

  Difference between temporary and permanent damages

Contrast the difference between temporary and permanent damages on the incentives of people to build new houses near the cement factory

  Cutting taxes during a recession

Which of the following is not a valid point in debating the merits of increasing government expenditures or cutting taxes during a recession?

  Q abc company expects that it will receive a large order

q. abc company expects that it will receive a large order from the spain government. but the order occurs abc will be

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