Relate to interest rate risk-premium bonds-discount bonds

Assignment Help Financial Management
Reference no: EM132001158

Kyser Public Utilities issued a bond with a $1,000 par value that pays $80 in annual interest. It matures in 20 years. Your required rate of return is 9 percent.

a. Calculate the value of the bond.

b. How does the value change if your required rate of return (1) increases to 12 percent or (2) decreases to 5 percent?

c. Explain the implications of your answers in part (b) as they relate to interest rate risk, premium bonds, and discount bonds.

d. Assume that the bond matures in 10 years instead of 20 years. Recompute your answers in part (b).

e. Explain the implications of your answers in part (d) as they relate to interest rate risk, premium? bonds, and discount bonds.

Reference no: EM132001158

Questions Cloud

Prepare an activities budget for cleaning and loading : Prepare an activities budget for cleaning and loading in the Loading Department for November, assuming 20 working days and the loading of an average of 15 truck
Find the periodic payments pmt necessary to accumulate : Find the periodic payments PMT necessary to accumulate the given amount in an annuity account.
This purchase increase the present value of the firm : For what range of interest rates would this purchase increase the present value of the firm?
Prepare a retained earnings statement for the year : Portman Corporation has retained earnings of $675,000 at January 1, 2014. Prepare a retained earnings statement for the year ended December
Relate to interest rate risk-premium bonds-discount bonds : Explain the implications of your answers in part (b) as they relate to interest rate risk, premium bonds, and discount bonds.
Calculate the inventory value : The pool's value on this date was $860,000. Calculate the inventory value at the end of 2013 and 2014 using the dollar-value LIFO method
Discuss the importance of effective communication : Discuss the importance of effective communication in the personal relationship, the therapeutic relationship, and the relationship within the interprofessional.
Make the consolidated eliminating entries for land sales : Petronet sold the land to an outside party on January 1, 2014 for $3,000,000. Make the consolidated eliminating entries for the intercompany land sales
Dollar amounts indicated and with betas specified : An investor has put money in four stocks in the dollar amounts indicated and with betas specified. What is the portfolio beta?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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