Business

FinanceQ&A LibraryA bond with annual coupon rate of 5.10% and price of $1,090 just yesterday paid a coupon. A total of 23 coupons remain to be paid. Suppose you buy the bond at today’s price, hold it and receive 8 coupons, and then sell the bond. If at the time you sell the bond its YTM has decreased a total of 50 basis points, find the selling price of the bond. (FYI; 0.01=1%=100 basis points; use semiannual compounding)Start your trial now! First week only $4.99!*arrow_forward*

Question

A bond with annual coupon rate of 5.10% and price of $1,090 just yesterday paid a coupon. A total of 23 coupons remain to be paid. Suppose you buy the bond at today’s price, hold it and receive 8 coupons, and then sell the bond. If at the time you sell the bond its YTM has decreased a total of 50 basis points, find the selling price of the bond. (FYI; 0.01=1%=100 basis points; use semiannual compounding)

Tagged in

Business

Finance

Find answers to questions asked by students like you.

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $300,000, has a...

A: Calculation of EAC of Techron I and Techron II:The EAC is calculated using a excel spreadsheet. The ...

Q: if you are 18 years old, deposit $5000 each year into a traditional IRA for 52 years, at 6% interest...

A: Annuity, A = $ 5,000Interest rate per year, R = 6%Period, N = 52 years

Q: Your son has come to you for advice. He is about to enter college and has two options open to him. H...

A: As a first step, let's calculate the NPV of Pharmacy / MBA option making use of the cash flows. We w...

Q: AJ’s Market generally holds $50,000 in cash in case an unexpected investment opportunity arises. Thi...

A: AJ’s Market generally holds $50,000 in cash in case an unexpected investment opportunity arises. Thi...

Q: Why so many mergers fail to produce the expected synergistic gains?

A: Merger:It is an agreement which unites two or more companies into a new company. It helps companies ...

Q: I have a question and I literally don't know where to begin. I am provided with a table of stock pr...

A: Let me explain to you, what you have been asked to do. But before that let me explain what informati...

Q: Better Mousetraps has developed a new trap. It can go into production for an initial investment in e...

A: At the outset, I want to bring to your notice that in the leading line of the question, we have been...

Q: Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: ...

A: Calculating the anticipated return after financing costs with the most aggressive asset financing mi...

Q: Use the following information: . Debt: $79,000,000 book value outstanding. The debt is trading at 94...

A: Calculation of Total Market Value:

Q: Compute the nominal annual rate of interest for the simple annuity due. Future value: - Present valu...

A: Calculation of Nominal Annual Rate of Interest:The Nominal Annual Rate of Interest can be calculated...

Q: The Alenso corporation's target capital stucture is 50% debt and 50% common equity. The cost of comm...

A: Formula to calculate WACC:

Q: I already ask this but I whant know how you do the calculation, please could you show me all the ste...

A: Calculating the price of bond if interest rate on the bond is 10%. We have,Price of bond = C [1- (1 ...

Q: What is the future value in 12 years of $1,000 payments received at the beginning of each year for t...

A: As a first step, let's gather all the information that question has to offer.Annuity investment = A ...

Q: Your firm is offered credit terms of 1/10, net 35. What is the effective annual interest rate on thi...

A: Calculating the value of effective interest rate on the credit terms. We have,Effective interest rat...

Q: Ms. Cristiana Piccini is valuing an investment that pays her $27,000 per year for the first ten year...

A: Calculation of Value of Investment: Excel Spreadsheet:

Q: ABC Enterprises' noncallable bonds currently sell for $1,048.50. They have a 5-year maturity, an ann...

A: The yield to maturity of a bond can be calculated using the RATE function in excel. Inputs are:Perio...

Q: A firm with sales of $500,000 has average inventory of $200,000. T he industry average for inventory...

A: Computation of inventory turnover:

Q: Participation #6: Why is it desirable to construct capital budgeting rules so that higher-risk pro...

A: A risk is a probability of unfavorable outcome. All investments are subjected to risks. So, a high ...

Q: Brewster’s is considering a project with a 5-year life and an initial cost of $120,000. The discount...

A: The life of the project is 5 years. However, it can be abandoned at the end of 3 years for a sale va...

Q: Suppose a family has a gross annual income of $43,200. a. What is the maximum amount the family sh...

A: Most financial advisors recommend that one limit his mortagage payment to 28% of the monthly income ...

Q: If the volatility of a stock is .33, find the standard deviation of: (see the attachment for the rem...

A: Recall the Black Scholes model derivation.Log of the stock price is normally distributed.The expecte...

Q: suppose the rate of $1 for yen is 83 yen, what is 2,5000,000 in dollar

A: Given amount = A = 25,000,000 YenExchange rate (Yen / $) = 83 ie. 83 Yen = 1 $We have to express A i...

Q: Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characte...

A: Calculation of weights of three components: Excel spread sheet:Note: Assumed $1,000 as par value

Q: Hi, I'm looking for help with solving the answer for the following question. I've tried it myself se...

A: Calculation of future value:There are 525,600 minutes in a year. So there are 10,512,000 minutes for...

Q: A bank's loan rate for a machine is 9%. Determine the effective rate on the basis of the compounding...

A: The effective interest rate or the effective annual rate (EAR) is the actual rate paid or earned on ...

Q: Consider a $5,000 deposit earning 10 percent interest per year for ten years. What is the future val...

A: Future Value (FV)Future value is the specific value or amount of an investment at a specific date in...

Q: Is the corporate tax schedule progressive? Why or why not?

A: A tax schedule can either regressive or progressive. It depends upon how the scehdule has been drawn...

Q: In November 2017 treasury 41/2s of 2044 offered a semiannually compaunded yiedl to maturity of 2.66%...

A: Asssuming there are no typos in the question, phrase ' 4 1/2 s of 2044' refers to a bond that pays a...

Q: Bank M offers the following terms for a $10 million loan: interest rate: 8 percent for one year on...

A: If the firm intends to borrow the $10 million for the entire year.For Bank M:Interest rate is 8 %. S...

Q: I already ask this but I whant know how you do the calculation, please could you show me all the ste...

A: Calculating the price of bond if bond mature in 10 year. We have,Price of bond = C [1- (1 / (1+r)n ]...

Q: I have been working on the question below and I'm stuck on how to finish it up. I have provided wha...

A: The below are the possible considerations:It is characterized as a connection between the prices of ...

Q: I now have $16,000 in the bank earning interest of 1.00% per month. I need $26,000 to make a down pa...

A: Calculation of Duration of the Investment:The Duration of the Investment can be calculated using a e...

Q: Calculate the future value after 3 years if $1,000 is deposited at 1.2% interest compounded monthly.

A: Calculate the future value after 3 years if $1,000 is deposited at 1.2% interest compounded monthly....

Q: What is the present value of end-of-year cash flows of $9,000 per year, with the first cash flow rec...

A: Cash flow: It denotes to the sum of cash that keeps flowing in the business and out of business duri...

Q: A company goes public with an offering price of $18. There is a 7 percent underwriting spread. There...

A: Overallotment option with the underwriter = 15% of shares on offer = 15% x 25 mn = 3.75 mn sharesThe...

Q: The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in € thousands) is ...

A: The firm has three sources of capital:Short term debtLong term debtEquityWe need to estimate the mar...

Q: Six potential services a bank provides?

A: A bank is a financial institution that accepts deposits from the public and makes loans from these d...

Q: What is opportunity cost and how does it affect the decision-making process for business decisions?

A: Discuss the opportunity cost and the way how it affects the decision making process for business dec...

Q: Required: Use an Excel spreadsheet to calculate the net present value NPV from a "Parent company per...

A: Calculating the value of total cost of plant and depreciation expenses using straight-line method in...

Q: Let C be the price of a call option that enables its holder to buy one share of a stock at an exerci...

A: Given that, K is the exercise price, S is stock price at time 0.

Q: dpb corporate bonds have a coupon rate of 9.2% APR (sa). The yeild to maturity is 8.5% APR (Sa). the...

A: Semi annual payments. Hence the period here is semi annual or half year. Hence, n = 2 x years to mat...

Q: Mexican Motor's market cap is 200 billion pesos. Next year's cash flow is 8.6 billion pesos. Securit...

A: Mexican Motor's market cap, E = 200 billion pesos.Next year's cash flow, C = 8.6 billion pesos.Secu...

Q: Storico Co. just paid a dividend of $1.45 per share. The company will increase its dividend by 24 pe...

A: D0 = $1.45;Year1 growth rate = g1 = 24%;Year 2 growth rate, g2 = g1 - 6% = 24% - 6% = 18%Year 3 grow...

Q: Until August 1971, industrialized countries around the world maintained a fixed exchange rate of the...

A: Answer 1:The correct answer is “Forward exchange rate”.Justification: A forward exchange rate is wh...

Q: Please help do this calculation step by step I have problems getting the final answer.

A: Calculating the value of weighted-average cost of capital (WACC). We have,WACC = (Weight of Equity x...

Q: Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 3.80 percent that s...

A: Calculation of cost of preferred stock:

Q: Kaye's Kitchenware has a market/book ratio equal to 1.200. The firm's stock price is 12.30 USD/share...

A: Market/book ratio of equity = 1.200Hence, MVE / BVE = 1.2Current stock price, P = $ 12.30 / shareNos...

Q: Bill Clinton reportedly was paid $10 million to write his book My Life. Suppose the book took three ...

A: Since you have specifically asked for excel workings, a snpashot of the excel model is attached for ...

Q: NOTE: You already replied on this question with the answers as indicated below. Unfortunately, all a...

A: Part (a)All financials below are in $ mn.The net cash flow at time 0 if the old equipment is replace...

Q: Heidi owns 680 shares of Boyd Enterprises, which is priced at $65.44 per share. The company plans a ...

A: Number of stocks prior to stock split, Npre = 680Proposed stock split: 6 for 5 that is a shareholder...