What is the real rate of return on this bond

Assignment Help Financial Management
Reference no: EM13951437

A bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?

4.00 percent

5.77 percent

1.06 percent

14.00 percent

2.50 percent

Reference no: EM13951437

Questions Cloud

What is the basic earnings per share : The Cow Company had 50,000 shares of common stock outstanding on January 1, 2014. On April 1, 2014, the company issued 20,000 shares of common stock. The company also has stock options outstanding that can be exercised for 5,000 common shares at an o..
What was company retained earnings at the end of the year : A company began the year with retained earnings of $1,000. Net income for the year was $250, it repaid $350 of its line of credit balance, and it paid dividends to its shareholders of $200. What was the company’s retained earnings at the end of the y..
Distributed a tri-fold flyer to individuals and families : Save Our Beaches, a NFP organization, prepared and distributed a tri-fold flyer to individuals and families at White Sands Beach, a popular beach for both residents and tourists. In addition, one segment of the flyer solicited contributions to the or..
Venture present value concepts : The ABC Corporation has been in operation for one full year (2013). Financial statements follow. ABC’s management is interested in determining the value of the venture as of the end of 2013. Sales are expected to grow at a 20 percent annual rate for ..
What is the real rate of return on this bond : A bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?
What is the market yield to maturity at the time of sale : You decide to purchase a zero coupon bond as a strategy to fund a year of college education. You estimate you will need $40,000 for a year of education. Suppose you need to sell the bond after holding it for 10 years. If the market price on the day y..
Promotional budget and sales budget : All else constant, what would Chester’s SG&A/Sales ratio be if the company had spent an additional $1,500,000 for Cat’s promotional budget and $750,000 for Cat’s sales budget?
The optimal capital structure simultaneously maximizes eps : The optimal capital structure simultaneously maximizes EPS and minimizes the WACC. The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price. The optimal capital structure simultaneously..
Account boasts a nominal annual return : Suppose your uncle takes the $40,000 now and wishes to invest it. He calls you because he is confused from an ad he sees. Investments-R-Us is offering the Euler Fund which compounds continuously and the Daley Fund which compounds 360 days per year. “..

Reviews

Write a Review

Financial Management Questions & Answers

  The treasurer is currently considering two alternatives

The treasurer of a middle market, import-export Company has approached you for advice on how to best invest some of the firm’s short-term cash balances. The company, which has been a client of the bank that employs you for a few years, has $250,000 t..

  Present value of the depreciation tax shield

Your firm is considering a project that would require purchasing $7.1 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the firm's tax rate is 36%, the appropriate cost of cap..

  Firms primary long-term financial objective

What should be a firm's primary long-term financial objective?

  Complex bank pays interest on accounts compounded annually

First Simple Bank pays 8.5 percent simple interest on its investment accounts. First Complex Bank pays interest on its accounts compounded annually. What rate should the bank set if it wants to match First Simple Bank over an investment horizon of 15..

  Assume that interest rate parity holds

Assume that interest rate parity holds and that 90-day risk-free securities yield 3% in the United States and 3.6% in Germany. In the spot market, 1 euro equals $1.38 dollar. Is the 90-day forward rate trading at a premium or discount relative to the..

  The balance sheet analysis highlights

Describe the major trends or observations that the income statement analysis highlights, and provide an opinion on what this means to the company. Describe the major trends or observations that the balance sheet analysis highlights, and provide an op..

  Investors should expect to be compensated for bearing

Investors should expect to be compensated for bearing ____ risk, but they should not expect to be compensated for bearing ____ risk.

  What is the expected rate of return of this asset

An asset has a 15% chance of a -10% return, a 25% chance of a 0% return, a 25% chance of a 5% returns, and a 35% chance of a 20% return. What is the expected rate of return of this asset?

  What is the probability that this stock

A stock had returns of 14 percent, 26 percent, and 8 percent for the past 3 years. Based on these returns, what is the probability that this stock will earn at least 43.51 percent in any one given year?

  Holding period returns of each of the three bonds

Bonds A, B, C and D are zero-coupon bonds with par value $1,000 each and yields to maturity of 6 percent, 8 percent, 10 percent and 12 percent respectively. Bond A matures in one year, bond B in two, bond C in three and bond D in four years. write ex..

  What is the amount of each payment

Roger Sterling borrows $20,000 to buy a car. The terms of the loan call for monthly payments for five years at a 5.9 percent rate of interest. What is the amount of each payment?

  Inventory assuming that all sales are on credit

The Fischer Sport Store has assets of $525,300, costs of goods sold of $305,000, accounts receivable of $57,600, and inventory of $109,100. How many days, on average, does it take the firm to sell its inventory assuming that all sales are on credit?

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