Five-year zero coupon bond with a face value

Assignment Help Financial Management
Reference no: EM131058024

Diane is interested in buying a five-year zero coupon bond with a face value is $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?

Reference no: EM131058024

Questions Cloud

Paper that investigating the effect of alcohol consumption : For the course project, you are to write a short paper investigating the effect of alcohol consumption on a labor market outcome. You will do this by applying the econometric techniques used in class to the data set that is available on SmartSite:..
Costs because of declining profits : A nonunion company offer to form a partnership with its employees in orer to decide what it can do to cut costs because of declining profits. Can the company do this?
Market segmentation theories-liquidity preference : Do the theories of the shape of the yield curve offer any insignts into the rate pattern? Discuss the expectations, liquidity preference, and market segmentation theories.
Heat exhaustion or stroke : He refuses because of the pain it causes his ankles, knees, and hips. He also states that the excessive heat is debilitating and he fears heat exhaustion or stroke. Ms. Demeter threatens to fire Joe. They both decide to go see the dealership manag..
Five-year zero coupon bond with a face value : Diane is interested in buying a five-year zero coupon bond with a face value is $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?
Coupon bonds outstanding with a current market price : Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $832. The yield to maturity is 16.28 percent and the face value is $1,000. Interest is paid semiannually. How many years is it until these bonds mature? A. 2..
Perfect approach to managing an organization : If you were asked to select the perfect approach to managing an organization, which theorist model or approach would you select? Why this specific approach?
Construct an e-r diagram that models exams as entities : Construct an alternative E-R diagram that uses only a binary relationship between student and section. Make sure that only one relationship exists between a particular student and section pair, yet you can represent the marks that a student gets i..
Different for a particular asset at particular point in time : What is the difference between the expected rate of return and the required rate of return? What does it mean if they are different for a particular asset at a particular point in time?

Reviews

Write a Review

Financial Management Questions & Answers

  Provided with the four cash flows

You are provided with the following four cash flows: Option A: $20,000 received 5 years from now. Interest is compounded annually. Option B: $3,000 received at the end of each year for the next 5 years. Interest is compounded annually.

  What is the operating cash flow of this project based

A project will reduce costs by $13,200 but increase depreciation by $6,200. What is the operating cash flow of this project based on the tax shield approach if the tax rate is 27.9 percent?

  In the long-term capital management

In the Long-term Capital Management (LTCM) bankruptcy case, as losses started to mount beyond acceptable boundaries, why weren’t the positions closed out?

  Research to develop a new computer game

KADS, Inc., has spent $470,000 on research to develop a new computer game. The firm is planning to spend $270,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $57..

  What is the expected return of portfolio invested

Stock A has an expected return of i4% and a standard deviation of 35%. Stock B has an expected return of 20% and a standard deviation of 65%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invest..

  Exchange rather than a dividend distribution

Among the assets in a decedent’s gross estate is stock in a closely held corporation that was left to a nephew. The interest passing to the nephew is required to bear the burden of all estate taxes and expenses. What amount of closely held corporate ..

  Calculate the growth rate in dividends

You buy a share of The Ludwig Corporation stock for $23.10. You expect it to pay dividends of $1.00, $1.15, and $1.3225 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $30.66 at the end of 3 years. Calculate the growth rat..

  What is the market value of debt

Gingle Co. issued 2 different zero-coupon bonds. Bond A is a junior bond with face value $87 million while Bond B is a senior bond with face value $200 million. The maturity of the debt is 1 year from now. What is the market value of debt?

  Preferred shares of comparable risk yield

A company issued preferred shares two years ago, paying a $3.52 dividend, which offered investors an original yield of 8%. Currently, the required return on companies with preferred shares of comparable risk yield 10%. Given this information, what sh..

  What is the pv of the investment

An investment offers 10,000 per year, with the first cash flow to be received today. If the relevant interest rate is 8% per year, what is the pv of the investment ( at year 0) ? should the answer be 135000? You can make 450 monthly payments for 5 yr..

  What is the days sale outstanding

Snider Industries sells on terms of 3/10, net 35. Total sales for the year are $1,869,000. Thirty percent of the customers pay on the 10th day and take discounts; the other 70% pay, on average, 64 days after their purchases. What is the day’s sale ou..

  Computer-based order entry system

Your firm is contemplating the purchase of a new $620,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $68,000 at the end of that time.

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