What is the present value of the bond

Assignment Help Finance Basics
Reference no: EM131227321

Bond Valuation Assume the following information for an existing bond that provides annual coupon payments:
Par value ¼ $1,000
Coupon rate ¼ 11%
Maturity ¼ 4 years

Required rate of return by investors ¼ 11%
a. What is the present value of the bond?

b. If the required rate of return by investors were 14 percent instead of 11 percent, what would be the present value of the bond?

c. If the required rate of return by investors were 9 percent, what would be the present value of the bond?

Reference no: EM131227321

Questions Cloud

How much should investors be willing to pay for these bonds : Valuing a Zero-Coupon Bond Assume the following information for existing zero-coupon bonds: - How much should investors be willing to pay for these bonds?
Create a sequence list of activities that will be required : I want you to create a sequence list of 30 activities that will be required to complete the work. For example asphalt demolition. Consider tasks that have to do with: Demolition, Site utilities, Roofing, Masonry, Carpentry, Steel erection, Doors, f..
Analyze the reasons for and practice of recruiting : Using your selected agency, analyze the reasons for and practice of recruiting and hiring a qualified workforce. Provide at least two reasons and examples to support your position.
What is the marginal utility of x and y : a. What is the marginal utility of X and Y? b. What is the MRSxy? c. Draw a sample indifference curve
What is the present value of the bond : What is the present value of the bond? - If the required rate of return by investors were 14 percent instead of 11 percent, what would be the present value of the bond?
Should unsuccessful attempts to commit a crime be punished : Explain the sense in which criminal penalties are "prices" designed to elicit the "efficient" level of crime.
Analyze the bakke and the university of michigan rulings : Analyze the Bakke and the University of Michigan rulings and discuss two implications these court rulings have on you as the personnel manager of your agency.
Who are victims of human trafficking : Discuss human trafficking in the scope of community policing. What is human trafficking? Who are victims of human trafficking? Why is it a significant issue? Why do you think many departments feel that it is not a priority?
Describe the conditions imposed by the european central bank : Describe the conditions imposed by the European Central Bank (ECB) when it provides credit to European country governments with debt repayment problems.

Reviews

Write a Review

Finance Basics Questions & Answers

  Why do many firms choose to issue stock dividends what is

why do many firms choose to issue stock dividends? what is the value of a stock dividend to a

  Multiple choice questions based on business finance

In terms of organizational costs, determine which of the following sequences is correct, moving from lowest to highest cost?

  Identify the evolving network of strategic relationships

Which of these relationships are the most important to Amazon? Explain your rationale.

  Expected rate of return

Company X bonds are selling in the market for $1,045. These 15 year bonds pay 7 percent annually on a $1,000 par value. If the bond is purchased at market price, what is the expected rate of return?

  Use 2 transactions in recent financial news to illustrate

use 2 transactions in recent financial news to illustrate and explain the roles of financial intermediaries and banks

  Importance of financial analysis

What is the purpose and importance of financial analysis? What are financial ratios? Describe the "five-question approach" to using financial ratios. What are the limitations of financial ratio analysis?

  An outside published material via a link to their writing

Discuss the following two issues. Please note: Make sure you have read and understood the related assigned reading before attempting a response. Some do even more, and learn even more, by introducing an outside published material via a link to their ..

  Ideal manufacturing company of sycamore illinois has

ideal manufacturing company of sycamore illinois has supported a research and developmentnbsp department that has for

  The following items are reported on a companys balance

the following items are reported on a companys balance sheetcash200000temporary investments100000accounts receivable

  Estimate the effective cost of the commercial paper

Sara was also approached by a bank, wanting her company's business, offered a letter of credit back-up facility with an annual fee of 50 basis point rather than a line of credit. Sara wondered how this would affect the cost of the commercial paper..

  Compute average arithmetic and standard deviation

Compute average arithmetic, average geometric, and standard deviation based on nominal returns. Compute average arithmetic, average geometric, and standard deviation based on real (in?ation adjusted) returns.

  Do you think the currency of zeus

Do you think the currency of Zeus (called the zee) will appreciate or depreciate against the dollar as a result of all the government actions described above? Explain.

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