Why is the current yield less than yield to maturity

Assignment Help Financial Management
Reference no: EM131554821

You purchase a U.S. 6%, 20-year bond with a face value of $100 at the price of $80. 1.) What is the duration of the bond? 2.) What is the current yield on the bond? 3.) What is the yield to maturity on the bond? 4.) Why is the current yield less than the yield to maturity? 5.) If you sell the bond after 8 years at a price of $90 what is your hold period yield? 6.) What is your realized compound yield if you held the bond to maturity? Assume you are able to reinvest all the coupons at 4% per year?

Reference no: EM131554821

Questions Cloud

Determine the total number of the handshakes : Twenty-eight people have been invited to a party. Each invitee meets all other invitees, shaking hands.
Discuss ueta provisions concerning meaning of signatures : Discuss UETA provisions concerning meaning and records of signatures. Discuss whether above facts place issue within the jurisdiction of jurisdiction of UETA.
How does this design and method accomplish the study goals : I need a specific method and design for my researchI plan to use quantitative studies and must show internal and external validity sample size, random sample.
Discuss advantage of economies of scale : Yet, JIT and Lean Manufacturing philosophies state that inventory is considered waste and should be eliminated as much as possible.
Why is the current yield less than yield to maturity : What is the yield to maturity on the bond? Why is the current yield less than the yield to maturity?
Mean stress score for professors : The significance level for the test is 1%. What are the critical values of z?
What is the firm net working capital : What is the amount of total liabilities and equity that appears on the firm's balance sheet? What is the firm's net working capital?
Proportion of the population : We want to find a 95% confidence interval for the true proportion of the population who favor the bill. What is the lower limit of the interval?
Explain the role faith plays in jesses life : Explain the role faith plays in Jesse's life. Use examples from the book to support your answer. Writ at least one paragraph containing 5-10 sentences

Reviews

Write a Review

Financial Management Questions & Answers

  What is the NPV of the decision to purchase a new machine

A firm is considering an investment in a new machine with a price of $18.03 million to replace its existing machine. The current machine has a book value of $6.03 million and a market value of $4.53 million. What is the NPV of the decision to purchas..

  Deduce which rate has larger standard deviation

Derive an expression for yAM in terms of ySB. You can assume all years have 365 days. - Deduce which rate has larger standard deviation.

  Entire balance in her account to invest in investment

Beverly Hills started a paper route on January 1, 2009. Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly. How much will she have on December 31, 2015? Use Appendix A and Appendix C ..

  What is the expected return of the portfolio

Your portfolio is invested 28 percent each in A and C and 44 percent in B. What is the expected return of the portfolio?

  What does this suggest about financial leverage

Bank L operates with equity to asset ratio of 6 percent, while Bank S operates with a similar ratio of 10 percent. Calculate the equity multiplier for each bank and the corresponding return on equity if each bank earns 1.5 percent on assets. Suppose,..

  Expand production increase the NPV of the project

Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 58,000 units a year at a price of $70 each. If the new product is a bust, only 38,000 units can be sold at a pr..

  Present three estimates of the dividend growth rate

Present three estimates of the dividend growthr ate and the corresponding estimates of the dividend in year 6.

  Spouses estates and defer paying estate taxes

Clients who want to avoid paying estate taxes in both spouses' estates and defer paying estate taxes

  Central back has purchased foreign exchange from the mines

the central back has purchased foreign exchange from the mines amounting to 31million USD at a price of k10 per dollar.

  What is the current price per share

Last week, Onboard Co. has announced that the next two annual dividends will be in the amount of $2.66 and $4.01, respectively. After that, the dividends will increase by 2.02 percent annually. The required return on this stock is 12.99 percent. What..

  Analyse given transactions using the accounting equation

Laurensmani SpA's financial year is to 31 December.- Analyse given transactions using the accounting equation on the hypothesis that the difference paid in cash was.

  Income statement columns for all revenue and expense account

Once you have your adjusted trial balance, you can move the totals to the Income Statement columns for all revenue and expense accounts and to the Balance Sheet and owners’ equity columns for all asset, liability, and equity accounts. Please be sure ..

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