What is current value of the bond and effective annual rate

Assignment Help Financial Management
Reference no: EM131062952

1. You want to earn a real rate of return of 3.64 percent at a time when the inflation rate is 2.84 percent. What is the approximate nominal rate which you must earn?

2. A bond has a par value of $1,000 and a coupon rate of 6.5 percent. What is the dollar amount of each semiannual interest payment if you own 8 of these bonds?

3. Alex purchased a $1,000 par value bond one year ago at a price of $1,016. At the time of purchase, the bond had 12 years to maturity and a 5 percent, semiannual coupon. Today, the bond has a yield to maturity of 5.25 percent. What is his realized yield as of today?

4. A Treasury bill has 40 days left to maturity. The bank discount yield on the bill is 3.75 percent. What is the effective annual rate?

5. A $40,000 face value bond matures in 64 days and has a bank discount yield of 4.5 percent. What is the current value of the bond?

Reference no: EM131062952

Questions Cloud

Constant growth stock valuation : Investors require a 16% rate of return on Brooks Sisters' stock (rs = 16%). a.What would the value of Brooks's stock be if the previous dividend was D0 = $4 and if investors expect dividends to grow at a constant compound annual rate of
What are your put options worth and what is your net profit : Suppose you purchase five put contracts on Testaburger Co. The strike price is $79, and the premium is $3.1. If, at expiration, the stock is selling for $63 per share, what are your put options worth? What is your net profit?
Calculate the expected dividend yield : You buy a share of The Ludwig Corporation stock for $21.80. You expect it to pay dividends of $1.01, $1.16, and $1.3323 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.02 at the end of 3 years. Calculate the growth rat..
What is the price of call option with the same strike price : A put option is currently selling for $5.7. It has a strike price of $50 and seven months to maturity. The current stock price is $57. The risk-free rate is 4.6 percent, and the stock will pay a $2.7 dividend in two months. What is the price of a cal..
What is current value of the bond and effective annual rate : You want to earn a real rate of return of 3.64 percent at a time when the inflation rate is 2.84 percent. What is the approximate nominal rate which you must earn? A $40,000 face value bond matures in 64 days and has a bank discount yield of 4.5 perc..
Five-year project has an initial fixed asset investment : A five-year project has an initial fixed asset investment of $295,000, an initial NWC investment of $27,000, and an annual OCF of −$26,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
Current dollar price of security-effective annual rate : A two-year STRIPS sells at an interest rate of 3.84 percent and a three-year STRIPS sells at a rate of 3.97 percent. What is the implied one year interest rate two years from now? Assume the rates are effective annual rates. A $50,000 face value STRI..
Exercise price of an option is fixed : It is April and a trader buys 100 September put options with a strike price of $21. The stock price is $17.2 and the option price is $4.44. At the expiration, the stock price becomes $18.8. Calculate the option profit to the trader. When one buys an ..
Prepare statement of retained earnings for the year : Retained Earnings Statement Rolt Company began 2013 with a $135,000 balance in retained earnings. During the year, the following events occurred: The company earned net income of $85,000. A material error in net income from a previous period was corr..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the cost of preferred equity

The Imaginary Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $839.36 per bond. Ca..

  Firm is considering purchasing a factory

A firm is considering purchasing a factory for $1 million. The factory will yield a cash flow of CF1 = $200,000 in one year, a cash flow of CF2 = $300,000 in two years, and then will be sold for CF3 = $900,000 in three years. The appropriate interest..

  Firms stock price fails to meet shareholders expectations

What are some actions an entrenched management might take that would harm shareholders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?

  What is the free cash flow for the current year

Bates Motors has the following information for the previous year: net income = $200; net operating profit after taxes (NOPAT) = $300; Total assets = $1,000 and total net operating capital = $800. The information for the current year is: net income =$..

  What is the necessary billing efficiency

A small consulting engineering company bought an office building for $910,000. The company has eleven engineers and eight support staff. Monthly expenses for for salaries, utilities, grounds maintenance, etc., are $108,000. Use an average billing rat..

  Explain the wolf company is examining two capital-budgeting

The Wolf company is examining two capital-budgeting projects with 5-year lives. The first, project A, is a replacement project; the second, project B, is a project unrelated to current operations.

  Arrange the following items into an income statement

Arrange the following items into an income statement. Label each item, place it in the appropriate category, and determine the bank's bottom- line net income. a. Interest paid on time deposits under $ 100,000: $ 78,002 b. Interest paid on jumbo CDs: ..

  Redicted by the project sponsors

The __________ involves comparing the actual results with those predicted by the project's sponsors and explaining why any differences occur.

  What implications to managers of each model using leverage

MM Theory on Capital Structure has three stages in its development which assumes 1) no taxes, 2) only corporate taxes are allowed, and 3) both personal and corporate taxes are allowed (Miller’s Model)? What implications to managers of each model with..

  Stock will pay dividends at time

A Stock will pay dividends at time t = 1 of $1.00. It is expected to grow at 10% as far as we can see into the future. If the appropriate discount rate for the risk of this stock is 15%, what should be the value of this stock, at t = 0? Note: The div..

  Calculate debt-to-equity ratio

In its closing financial statements for its first year in business, ABC Enterprises, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of $3,408, accounts payable of $700, short-term notes payable of $740, long-term l..

  Combined annual income

Dan and Mary Green are in their mid-30s and have two children, ages 8 and 5. They have combined annual income of $95,000 and own a house in joint tenancy with a market value of $310,000, on which they have a mortgage of $250,000.

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