What is the yield to maturity of the par bond

Assignment Help Finance Basics
Reference no: EM13520999

Masters Corp. issues two bonds with 15-year maturities. Both bonds are callable at $1,080. The first bond is issued at a deep discount with a coupon rate of 7% and a price of $520 to yield 15.6%. The second bond is issued at par value with a coupon rate of 6.95%.

a. What is the yield to maturity of the par bond? (Round your answer to 2 decimal places.)

b. If you expect rates to fall substantially in the next two years, which bond would you prefer to hold?

Reference no: EM13520999

Questions Cloud

Find what kind of radiation is being used : In a Young's double-slit experiment with electromagnetic radiation that is not necessarily visible, What kind of radiation is being used
Collection process on accounts receivable : 1. How can a company improve its collection process on accounts receivable. Offer multiple suggestions with explanation.
Define heat generated from combustion goes to heat the water : What volume of fuel should you bring? Assume each of the following: the fuel has an average formula of C7H16; 15% of the heat generated from combustion goes to heat the water
What was the bullets speed after leaving the can : A 7 g bullet moving horizontally at 200 m/s passes through a 150 g tin can sitting on a post. What was the bullets speed after leaving the can
What is the yield to maturity of the par bond : What is the yield to maturity of the par bond?
What are obriens characters trying to escape : What are O'Briens characters trying to escape and why can they not face and confront what plagues them?
Explain what is the limiting reactant and mass of milk : Milk of magnesia, Mg(OH)2, is prepared from aqueous solutions of magnesium sulfate and sodium hydroxide. If a solution containing 50.0g of MgSO4 is added to a solution with 50.0g of NaOH, what is the limiting reactant and mass of milk of magnesia ..
Find the final temperature of the rock-water system : A 206kg rock sits in full sunlight on the edge of a cliff 5m high. The temperature of the rock is 30.2 degrees celcius. what is the final temperature of the rock-water system
What is the rate at which gravity does work on the skier : the record of 203.1 km/h for speed skiing set by franz weber at velocity peak in colorado was achieved in a mountain slope inclined downward at 51 degrees. what is the rate at which gravity does work on the skier

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute operating cash flow and change in net working

texas roks inc. is considering a new quarry machine. the costs and revenues associated with the machine have been

  What was dollar price of the bond

Assume that Phuket Beach Hotel's $1,000-par-value bond had a 5.700% coupon,matured on May 15, 2017, had a current price quote of 97.708, and had a yield to maturity (YTM) of 6.034%.

  Determination of best alternative

Suppose you are offered two jobs. One initially pays $100,000 annually, and your salary will grow annually at 11.5 percent. The other pays $97,000 yearly but your salary will grow at 12%.

  Assume the public in the small country of harvardia

Assume the public in the small country of Harvardia does not hold any cash. Commercial banks, however, hold 5% of their checking deposits as excess reserves, regardless of the interest rate.

  Reasons for business to file for bankruptcy

There're many reasons why a business may file for bankruptcy. Describe the reasons that would drive a business to file for bankruptcy.

  At what cost of capital do the two projects have same net

Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Year Project A Cash Flow Project B Cash Flow 0 -$10,000 -$8000 1 1,000 7000 2 2,000 1000 3 6,000 1000 4 6,000 1000 At what cost of capital do th..

  Mirror ball ranch is considering the purchase of a new

mirror ball ranch is considering the purchase of a new excavator for 200000. the new excavator has a useful life of 6

  Explain the difference in assumptions underlying portfolio

explain the difference in assumptions underlying portfolio theory and the

  What is this prize worth to you today

You just won the grand prize in a national writing contest! As your prize, you will receive $2,000 a month for ten years. If you can earn 7 percent on your money, what is this prize worth to you today?

  What is the project discounted payback

Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?

  What price should the preferred stock sell for

I have purchased a preferred stock whose par value is $500. The preferred stock pays a 4.5% dividend. If investors require a 5.5% rate of return for these shares, what price should the preferred stock sell for?

  Truck co is considering the purchase of a new production

truck co. is considering the purchase of a new production machine for 200000. the purchase of this machine will result

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