You buy a 10% coupon bond 1 year ago for $1,060 it has a 1,000 face value and this bond sells for $1,085 today. 1. what is your total dollar return on this investment over the past year? 2. what is the total nominal rate of return over the past year? 3. if the inflation rate last year was 9%, what is your total rea
12% coupon bonds, with 5 yrs left to maturity, bonds make annual payments, if the bond currentyly sells for $1,107.93 what is the YTM? so i did: 12%=$120 every year for 5 years 1,107.93=$120 x [ 1-1 / (1+r)5] /r +1000/(1+r)5 ( the five is an exponent ) yet i do not know how to find the rate of return to finish up
What is the value of a 20-year, 7% annual coupon bond if Kd equals 9%? What is the value if inflation increases 3%? What is the value if inflation decreases 3%? Show formulas and entries on a financial calculator.
1. You are considering an investment in the bonds of a company. The bonds which pay interest semiannunally, will mature in 8 8years and have coupon rates of 9.5%. Currently the bonds are selling for $872. a) If your require rate of return is 11% for bond in the risk class, what is the highest price you would be willing to
Bonds and stocks are very similar securities in many respects. For example, market value of both are determined by their expected future cash flows; and both show price sensitivity- some more, some less- to a set of common market factors. At the same time, some may even go further and state that when it comes to portfolio invest
--- 1. Calculate the duration of a $1000, 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%. 2. Considered the bond in the previous question. Calculate the expected price change if interest rates drop to 6.75% using the duration approximation. Calculate the actual price change using di
A bond has been issued with a $1,000 face value and a coupon rate of 7%. If the bond has a life of 30 years, pays annual coupons and the yield to maturity is 6.8% what will this bond sell for?
ABC Industries bond has a 10 percent coupon rate and a $1000 face value. Interest is paid semiannually, and the bond has 20 years to maturity. If investors require a 12 percent yield, what is the bond's value? What is the effective annual yield on the bond? XYZ corp. bond carries an 8 percent coupon, paid semiannually. The pa
How would set the following problem up in excel? I understand longhand YTM & Current yield but am lost in excel. XYZ issued a new series of bonds on January 1, 1981. The bonds were sold at $1,000 par, have a 10% coupon, and mature in 2010. The coupon is semi-annual. What was the YTM of the bonds on January 1, 1981? What
KIC Inc. plans to issue $5 million of perpetual bonds. THe fave value of each bond is $1,000. The annual coupon bond is 12%. Market interest rates on one-year bonds are 11%. With eqaul probability, the long-term interest rates will be either 14% or 7% next year. Assume investors are risk-neutral. A. If the KIC bond are noncallab
1. Consider a $1,000 par value bond with a 7% annual coupon. The bond pays interest annually. There are 9 years remaining until maturity. What is the current yield on the bond assuming that the required return on the bond is 10%? 2. Assume that you plan to buy a share of XYZ stock today and to hold it for 2 years. Your
Have 2 bonds x and y (both make annual payments) bond x is a premium bond , pays a 10% coupon, has a ytm of 5 % and 17 years to maturity. bond y is a discount bond, pays a 5% coupon, has a ytm of 10% and 17 years to maturity. i have to find out the value of the bonds 6 and 10 years from now :(if interest rates remain unchan
Three problems on Stocks and Bonds: Calculate the required rate of return for Mercury Inc. What is the market risk premium? What is the bond's annual coupon rate?
1. Calculate the required rate of return for Mercury Inc., assuming that investors expect 5% rate of inflation in the future. The real risk-free rate is equal to 3% and the market risk premium is 5%. Mercury has a beta of 2.0, and its realized rate of return has averaged 15% over the last 5 years. 2. A stock has an expect
1. Helen's Pottery Co.'s stock recently paid a $1.50 dividend (D0 = $1.50). This dividend is expected to grow by 15% for the next 3 years, and then grow forever at a constant rate, g. The current stock price is $40.92. If ks (required rate of return) = 10%, at what constant rate is the stock expected to grow following Year 3?
Create a scenario in which you have to make a decision between two investments. In order for you to decide which investments will be the most profitable you must calculate the time value of money. Use hypothetical investment dollars, interest rates, and terms to illustrate your problems and support your conclusions. Research
Consider the data in the "example" sheet. (File attached). You are given the STRIP prices for March 29th 1996. You are to test whether the prices of STRIPS and that of Treasury notes are consistent. That is we are looking for mis-pricing and abitrage opportunities. There is a 6 and 1/4 Treasury note (pays 6.25% coupon semi-annu
Co issued $750,000 of 4%, 12-year bonds on 10/1/05 plus accrued interest at a time when the market rate of interest was 6%...
Co issued $750,000 of 4%, 12-year bonds on 10/1/05 plus accrued interest at a time when the market rate of interest was 6%. The bonds have an authorized date of 8/1/05 and pay interest each 2/1 and 8/1. The effective-interest method is used to amortize any discount or premium. Compute the: 1) semi-annual interest payment
Company issued $1,500,000 of its 10%, 20-year bonds on their authorized date of 6/1/05. The bonds were issued at a price of $1,796,893 to produce an effective yield of 8%. Interest payments are made twice per year, 6/1 and 12/1, with discounts and premiums being amortized using the effective interest method. Compute the 1
I have 10 questions that I need help with. (See attached file for full problem description) --- 1. Suppose that an investor with a 5-year investment horizon is considering purchasing a 7-year 9% coupon bond selling at par value of $1,000. The investor expects that she can reinvest the semi-annual coupon payments at an an
(See attached file for full problem description) --- 1. Aero Company currently has net income of $3 million and 1. million common shares outstanding which sell for $20 per share. Aero has decided to issue new stock to raise $4,000,000 to expand its operations. Aero's investment banker will sell the new shares for $18 per share
Explain how each of the following factors affect the valuation of a firm's bonds assuming that all other factors remain constant: 1) An increase in the general level of interest rates; 2) An increase in foreign competition; and 3) An increase in the firm's balance sheet debt.
1. What is the present value of: (a) $9,000 in 7 years at 8 percent 2. If you invest $9,000 today , how much will you have : (a) In 2 years at 9 percent (d) In 25 years at 14 percent (compounded semi-annually) 3. How is valuation of any financial asset related to future cash flows? 4. What factors migh
1) Consider a bond paying an annual coupon of $80 with a face value of $1,000. Calculate the yield to maturity if the bond has: a. 20 years remaining to maturity and is priced at $1,200 b. 10 years remaining to maturity and is priced at $950 2) Consider the stock of Davidson Company, which will pay an annual dividend
How do I find N (number of periods)for the bond? I think this is why I don't understand how to work out the problem. Please answer in xls and explain how to do this. It is January 2005, and you observe the following price quote: BK Corp. 5 1/2s28Dec Close 92 3/4 1. Suppose interest rates were to fall by 1.5% over the
Question 1 Retirement Savings. You believe you will need to have saved $500,000 by the time you retire in 40 years in order to live comfortably. If the interest rate is 6% per year, how much must you save each year until retirement to meet your retirement goal? Question 2 Bond Yields. An AT&T bond has 10 years until maturit
Fill in the table for the following zero Coupon bonds. The face value of each bond is $1,000. Price Maturity(years) Yield to Maturity $300 30 ? $300 ? 8% ? 10 10%
CANNOT FIGURE OUT HOW TO APPROACH THE FOLLOWING QUESTIONS 1. Use the information below to calculate the EVA for the company. (Complete problem found in attachment) Net profit 3.5 million bonds 15000000 equity $1 par 350000 retained earnings 250000 bond price 962 coupon (semi-annual) 55 years to maturi
Please assist me with these questions (also attached): Instructions: Designate the best answer for each of the following questions. Questions 1 and 2 are based on the following information: Lake Company recently incurred the following costs: (1) Purchase price of land and dilapidated building $250,000 (2) Real estate
Time Value of Money, Bond & Stock Valuation, Risk & Return yield to maturity, price of a bond, present value, rate of return on investment, constant dividend growth model, stock's intrinsic value, expected return and standard deviation return, beta of stock, amortization, time value of money
For problems 1 - 4: It is January 2004, and you observe the following price quote: IBM 9 1/2s26 Close 98 1/4 1. What is today's annual yield to maturity for this bond? 2. Suppose interest rates were to remain constant. What would be the bond price on Jan. 1, 2006? 3. Suppose interest rates were to fall b