How much would a zero coupon bond sell

Assignment Help Financial Management
Reference no: EM131308287

1. How much would a zero coupon bond sell for today that pays $1,000 in 10 years, assuming an interest rate of 3% that is compounded monthly? Assume that there are no sales commissions or other transaction costs. Note: Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Instead, investors buy zero coupon bonds at a deep discount from their face value, which is the amount a bond will be worth when it "matures" or comes due. When a zero coupon bond matures, the investor will receive one lump sum equal to the initial investment plus the imputed interest.

2. Find the Future Value 86 months from now of an investment of $11,342 made 6 months from now if the interest rate is 6.21% compounded monthly.

Reference no: EM131308287

Questions Cloud

Job to give him time to develop and launch a new product : Kal would like to work for a few years and then leave his job to give him time to develop and launch a new product. Kal would like to make 8 equal annual deposits so he can have enough to live on while he develops his product. He plans to give himsel..
Find a newsworthy article from well established news source : Find a newsworthy article from a well-established news source, ie; The Wall Street Journal; Business Journal or the like, that discusses a similar ethical dilemma.
Pay for the future development fees : Howton & Sons just purchased a piece of investment property. At the end of year 6, the company will begin paying city development fees of $17934 per year. The company will pay the fees for 8 years, at which point the property will be sold. How much s..
Theoretical model of the optimal capital structure : With respect to capital structure, the firm’s. mix of debt and equity, explain Modigliani and Miller’s theoretical model of the optimal capital structure, detailing why a firm’s investing decision and financing decision are inseparable.
How much would a zero coupon bond sell : How much would a zero coupon bond sell for today that pays $1,000 in 10 years, assuming an interest rate of 3% that is compounded monthly? Find the Future Value 86 months from now of an investment of $11,342 made 6 months from now if the interest rat..
Critically analyze the current state of your organization : Critically analyze the current state of your organization, the overall leadership approach, and recommendations for improvement if needed.
Find the present value of a quarterly cash stream : Find the present value of a quarterly cash stream that is $44 at the end of the 1st quarter, but then doubles each quarter for the next three quarters, where the interest rate is 7% compounded weekly. On Jan 1st you paid $695 to get a series of cash ..
Draw the efficient frontier of portfolios : Consider two stocks: ABC and XYZ with the following information-Draw the efficient frontier of portfolios if (a) the correlation coefficient is 0.4, and (b) -.3. These will be two different graphs
Identify a well known organization : Identify a well-known organization that has been "caught" in an audit nightmare. What might the corporation have done to avoid a catastrophe?Was the blunder a recoverable one?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the value per share of your firm stock

Assume that the average firm in your company's industry is expected to grow at a constant rate of 5% and that its dividend yield is 7%. If the last dividend paid (D0) was $3, what is the value per share of your firm's stock?

  Assume the market price of a 5-year bond for margaret inc

assume the market price of a 5-year bond for margaret inc. is 900 and it has a par value of 1000. the bond has an

  Identify the direction of change in modified duration

Calculate modified duration using the information above. If the yield to maturity increases to 8.5%, what will be the change (in dollar amount) in bond price? Identify the direction of change in modified duration if: i. the coupon of the bond is 4%, ..

  What is the companys stock price after three years

Aspen purchased a dot-com stock, which was heavily advertised on the Internet for $35 per share shortly after the stock's IPO. Over the next three years, the stock price declined by 17% each year. What is the company's stock price after three years?

  What transaction should you do

You hold a stock portfolio worth $15 million with a beta of 1.05. You would like to lower the beta to 0.90 using S&P 500 futures, which have a price of 460.20 and a multiplier of 250. What transaction should you do?

  About the yield to maturity on bond and the bond price

Which of the following statements is true about the Yield to Maturity (YTM) on a bond and the bond price?

  Find the bond equivalent and effective annual

At a coupon rate of 17%. Required: Find the bond equivalent (YTM) and effective annual (EAY) yield to maturity of the bond for the bond prices $1,045, $1,000, $1,145. Bond equivalent annual yield to maturity (YTM) Effective annual yield to maturity (..

  Calculate the annuity that has same present value

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,830,000 and will last for 5 years. Variable costs are 37 percent of sales, and fixed costs are $152,000 per year. Machine B costs $4,440,..

  Do you consider the product to be a success or failure

Do you consider the product to be a success or failure from the BoS perspective, from UBSWarburg's perspective, and why?

  Why should a recession connected with a financial crisis

Why should a recession connected with a financial crisis be more severe than a recession that did not involve a financial crisis?

  Assuming you contribute no additional savings

You are saving money for a down payment on a house. Suppose you want to have total savings of $20,000 in 10 years time and you have currently $5,000. What annual interest rate do you need to earn on your initial investment, assuming you contribute no..

  Expected rate of return from this investment opportunity

James Fromholtz is considering whether to invest in a newly formed investment fund. The fund’s investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the fund’..

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