Calculate the initial and current price

Assignment Help Business Economics
Reference no: EM131523981

Suppose you are holding a $25,000 deep discount bond that initially had 30 years to maturity.

a. Calculate the initial and current price of this bond if 8 years later you must sell the bond and market interest rates rise from 5.51 to 7.77%.

b. Compare your actual return with the return you expected when you purchased the instrument.

c. Explain how the returns would have been different if this had been a 15 year instrument initially. Your explanation should be supported by your calculations.

Reference no: EM131523981

Questions Cloud

What laboratory values are considered abnormal : What laboratory values are considered abnormal? Explain each abnormality and discuss the probable causes from a pathophysiologic perspective.
Reduce real interest rates : Also, if government decides to reduce real interest rates as a part of their monetary policies,what would happen to the aggregate supply and demand?
How does leadership have direct impact upon planning process : How does leadership, and the type of leadership style, have a direct impact upon the planning process for risk-reduction measures within the community?
Calculating real returns and risk premiums : Calculating Returns and Variability. Calculating Real Returns and Risk Premiums.
Calculate the initial and current price : Calculate the initial and current price of this bond if 8 years later you must sell the bond and market interest rates rise from 5.51 to 7.77%.
Describe the cdfs : Assess these fractiles for the following uncertain quantities: 0.05 fractile, 0.25 fractile (first quartile), 0.50 (median), 0.75 fractile (third quartile).
What is general industries expected current share price : what is General Industries' expected current share price?
What was the critical risk reduction issue for bend oregon : What was the critical risk reduction issue for Bend, Oregon? Who were the members of the leadership team for the initiative?
Bond supply-bond demand model : Using the bond supply/bond demand model, graphically illustrate and explain the impact on i and q if the government were to simultaneously increase

Reviews

Write a Review

Business Economics Questions & Answers

  Case study - technology and economic change getting the

case study - technology and economic change getting the benefits fromtasks to be undertakenbull read chapter 13 in

  Illustrate what might you consider to be your fixed factor

Illustrate what might you consider to be your "fixed factor". Illustrate what alternative decisions might you be able to make in long run.

  About respective roles of each-business-government-society

We will discuss your individual perspectives on the BGS relationships in the US economy today.  My intention here is to get a sense of the way you have viewed these relationships from what you know about the respective roles of each - Business - Gove..

  Negative income tax to support low income families

Consider a negative income tax in which an individual receives a cash benefit of B per month, and pays a marginal tax M on any income earned. If an individual’s income is Y, their combined income from earnings and benefit is then B+(1-M)Y up to the i..

  Why are the issues in the film important

Write a 700- to 1,050-word paper describing how ethical principles can be used to address organizational issues. Include the link to the film you select. Include the following:

  Positive effects of the price ceiling

Your essay should be 2-3 paragraphs long, your thoughts should be well organized and you should address the following questions: Let's say that the government imposes a price ceiling on gasoline, what would be the positive effects of the price ceilin..

  Self-evident distribution of production

If the world had no borders, where would production happen? In the place where it could be done at lowest opportunity cost, benefiting us all? Why do the addition of artificial political borders change this self-evident distribution of production. Wh..

  Give two examples of possible net surpluses

Give two examples of possible net surpluses that three voters get from each of two possible political alternatives A and B. Construct your first example so that the alternative that wins a majority vote generates the maximum total net surplus. Make y..

  What considering to throw a party to its students

The Faculty of Economics and Administrative Sciences is considering to throw a party to its students. The marginal benefits to the students are given by MB=1200-Q2.

  Best defines basic research

Which of the following best defines basic research?

  Civilian non-institutionalized population

Suppose that civilian non-institutionalized population (CNIP) is 120 million, and the labour force participation rate is 65%. What is the unemployment rate if employment is equal to 70 million? Justify your answer.

  Firms long-run average total costs of producing

Suppose that a firm’s long-run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

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