What is the present value of the bond show your work

Assignment Help Financial Management
Reference no: EM13245499

You buy a government bond that pays interset twice a year. The interset payment is $300 each six months. The bond matures in six years. The face value of the bond is $10,000. The annual market interset rate is 6 percent.

a. What is the present value of the bond? show your work.

b. After six months go by, you receive the first interest payment of $300. The annual market interset rate has declined to 5 percent and you decide to sell the bond. What is the bond's present value when you sell it? show your work.

c. What is your total return from owing the bond for six months ( expressed at annual rate, in percentage points, with two decimals)? show your work.

Reference no: EM13245499

Questions Cloud

Explain what element represents increasing marginal cost : Give a hypothetical/real world example of the MR=MC principle (Profit maximizing point). Explain what elements in example represents decreasing marginal revenue/benefit and what element represents increasing marginal cost.
How much would you be willing to pay for this security : Suppose that one year has elapsed, you have received the first payment of $600, and the market interset rate is still 5 percent. How much would another investor be willing to pay for your security?
What is the frequency of the sound produced : A person is drinking water from a plastic bottle. When the water level is 6cm from the top of the bottle, the person blows across the top producing a sound
Describe relationship between unemployment and real wages : Describe the relationship between unemployment and real and nominal wages. Which is more important and why What effects would either an increase or decrease in unemployment have on wages
What is the present value of the bond show your work : You buy a government bond that pays interset twice a year. The interset payment is $300 each six months. The bond matures in six years. The face value of the bond is $10,000. The annual market interset rate is 6 percent.
What is the centripetal acceleration of a helicopter : What is the centripetal acceleration of a helicopter flying in a horizontal circle of a diameter 510 m at a speed of 120 m/s
Why is it that firms can earn profits in the long run : As an industry moves from being a monopoly to a monopolistically competitive one (due to the entry of new competitors as the monopoly's patents expire, for example), what happens to the elasticity of the demand curve facing the firm
What effect would each of the following have on aggregate : What effect would each of the following have on aggregate demand or aggregate supply
What have been some of consequences of government price : explain using a numerical example, how the lawof diminishing returns operates. how does the law of diminishing returns explain the behavior of total cost, total variable cost and marginal cost as output increase

Reviews

Write a Review

 

Financial Management Questions & Answers

  How would you advise the company to handle the repatriation

Determine the spot and 12-month forward exchange rates, and determine any change in the ROS repatriated in 12 months based on exchange rates versus the current forecast.

  Negative growth stock

Questions related to Negative growth stock

  Evaluate the proposal to purchase advanced machine

Calculate the payback period if advanced machine is purchased and calculate the net present value if advanced machine is purchased.

  Evaluate the value of leased assets

Estimate the value of leased assets. If you misestimate the average life to be 10 years, how large will the valuation error be?

  Explain what is the firm''s weighted average cost of capital

Fancee Restaurant's cost of equity is 15.3 percent and its aftertax cost of debt is 6.1 percent. What is the firm's weighted average cost of capital if its debt-equity ratio is 0.58 and the tax rate is 30 percent?

  Compute the firms market capitalization and enterprise value

Calculate the firm's market capitalization and then calculate the enterprise value. b) Use the CAPM formula to determine the firm's cost of equity

  Evaluate the impact of a major customer

Analyse the current financial state of Anthony's Orchard and evaluate the impact of a major customer cancelling their expected order.

  Limiting the significant growth of a sole proprietorship

Short Answer and Short Problems,  Briefly discuss the most important factors limiting the significant growth of a sole proprietorship or partnership?

  Develop a financial analysis

Develop a financial analysis

  What is a business plan

Explain how the idea of a brewing device for a small apartment became a startup enterprise. What did you learn from that bit of entrepreneurial history

  Method for estimating a venture''s value

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

  Explain what is the firm''s cost of common equity

the dividends are growing at 5%, flotation costs are $2 per share and the firm will net $72 per share upon the sale of the stock. What is the firm's cost of common equity?

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