Investor lose on the purchase of the bond

Assignment Help Financial Management
Reference no: EM131317931

An investor buys a $1,000, 20 year 7 percent (interest paid semiannually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?

Please show your work.

Reference no: EM131317931

Questions Cloud

Discuss how the edwards rule is related to this situation : Identify and discuss the constitutional amendments that would relate to this situation.Discuss how the Edwards Rule is related to this situation.In your opinion, determine if the suspect's confession to the detective is admissible.
Determine the bond yield to maturity : Determine the bond's yield-to- maturity. Explain why an investor would be willing to pay $1,025 for a bond that is going to be worth only $1,000 at maturity.
Prepare statement of retained earning-income statement : You are thinking of investing in one of two corporations, both in the same industry, the Bill Gate Corporation. Prepare a statement of Retained Earning. Prepare Income Statement including EPS. Prepare multiple step Balance Sheet.Capital Stock must be..
Push for year end sales ethical : In early December the Boyer Company embarks on a sales promotion giving a special 10% discount for orders received by December 15. Comment on the ethics of this promotion.
Investor lose on the purchase of the bond : An investor buys a $1,000, 20 year 7 percent (interest paid semiannually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?
Why would writing off in process research : "Big Bath"-Comment on how a "Big Bath" would have enabled WorldCom to cover up its fraud.- Why would writing off "in-process" Research and Development be similar to a "Big Bath"?
How each of seven domains aligns within your organization : Explain how to obtain information, documentation, and resources for the audit. Analyze how each of the seven domains aligns within your chosen organization.
Three-year treasury security rate : Suppose we observe the three-year Treasury security rate to be 12%, the expected one-year rate next year - E(2r1) - to be 8% and the expected one-year rate the following year - E(3r1) - to be 9%.
How it would make a difference in the lives of youth : Explain with statistical data found in authoritative sources how and why that type of program is effective, andexplain in detail the role a police, probation or corrections officer could play in such a program and how it would make a difference in t..

Reviews

Write a Review

Financial Management Questions & Answers

  Taxpayer with no dependents and no itemized deductions

Calculate the 2014 total tax for Gordan Geist, a single taxpayer with no dependents and no itemized deductions. He has an active income of 40,000, short-term capital gain income of 4,000 from sale of stock, and 7,800 from book royalties.

  Traders strategy to beat the benchmark

By how much does this day trader's strategy have to beat the benchmark in order to make this a profitable activity?

  Finding the required interest rate

Your parents will retire in 20 years. They currently have $320,000, and they think they will need $2,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?

  Considering two mutually exclusive projects-cash flows

You are considering two mutually exclusive projects. Project A has cash flows of -$87,000, $32,600, $35,900, and $43,400 for years 0 to 3, respectively. Project B has cas flows of -$85,000, $14,700, $21,200, and $89,800 for years 0 to 3, respectively..

  What is the value of As capital without a merger

N Corporation is considering the acquisition of A Corporation. A Corporation has earnings before interest and tax of $1.75 million, and asset replacement cost approximately equals depreciation. Assuming a 20 percent tax rate and a 10 percent required..

  Considering a project with an initial fixed asset cost

Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated salv..

  Analysts predicted earnings per share

Analysts predicted earnings per share (EPS) for your company to be $0.12 at the close of 2020. How does this compare to actual EPS for 2020? If actual EPS is higher than the analysts’ prediction, what factors contributed to the success? If actual EPS..

  Underlying critical issue in the dividend policy discussion

The underlying critical issue in the dividend policy discussion is

  Holding period return-money-market yield basis

A. An investor buys $1m face value of a new 91-day US T-Bill at a discount of 6.29%. What is the purchase price? B. The investor sells the bill 31 days later when discount rates have risen to 6.35%. What are the sale proceeds? C. What is the holding ..

  The risk free rate and expected rate on stocks

A company's stock has a beta of 1.15. The risk free rate is 4.72%, and the expected rate on stocks is 10%. If a share of this common stock has just paid a quarterly dividend of $.35, and the long-run growth rate is 5 percent, value this stock.

  How much does common have to rise by to justify conversion

Maple Aircraft has issued a convertible subordinated debenture at 6.00% interest due 2020. The conversion price is $64.00 and the debenture is callable at 104.00% of face value. By how much does the common have to rise by 2020 to justify conversion?

  Importance of decision making as a management activity

Has what you have learned in this subject created an increased awareness of the importance of decision making as a management activity? Why or why not?

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