Use the following bond quote Company in Systems Symbol ISU GO Coupon 650% Maturity May, 2032 Rating Moody's SAPFAR Baa2880-08- High Last 102.617 91.865 93.231 Change Viek 7482% 1650 a. What is the yield to maturity of the bond? (Do not round Intermediate calculations. Enter your answer as a percent rounded to 3 decimal places) % b. What is the current yield of the bond? (Do not round Intermediate calculations. Enter your answer a percent rounded decimal places)
Q: betty's bakery is planning for future expansion. the company estimates that i will need 59,500 to…
A: The concept of time value of money will be used here. As per the concept of time value of money any…
Q: Your company is looking at a new project in Mexico. The project will cost 9 million pesos. The cash…
A: To determine whether your company should make the investment in Mexico, we need to calculate the net…
Q: 1-a. Calculate the future value at the end of three years. (FV of $1, PV of $1, FVA of $1, and PVA…
A: We can determine the future value using the formula below:In the formula above PV = amount deposited…
Q: Suppose a hedge fund manager earns 1% per trading day. There are 250 trading days per year. Answer…
A: First, we'll examine the annual return when investors are allowed to reinvest the daily earnings,…
Q: f you invest $2,700 for 20 years and it doubles in that time frame, what is the interest rate at…
A: The future value can be calculated by
Q: What is the present value of $3,000 that is due in 4 years if the interest rate is 3.85% 3…
A: As per the concept of time value of money the worth of money changes with passage of time. This is…
Q: Calculate the present value of the cash flow shown below. Interest rates are 13.00% per year,…
A: The rate of return is 13%.
Q: Rachel and Alexander Harrison need to calculate the amount they can afford to spend on their first…
A: Affordability ratio refers to the monthly expense that a person can afford out of his income.Monthly…
Q: Which is the better buy? 4-pack of clay pots for $7.40 7-pack of clay pots for $13.17
A: We need to calculate cost per pack. Cheaper will be better to buy.Cost per pack = total cost/number…
Q: Your financial advisor tells you that if you earn the historical rate of return on a certain mutual…
A: Time = t = 3 YearsPresent Value = pv = $20,000Future Value = fv = $23,152.50
Q: State whether the following statement is true or false and provide a hand-written explanation of…
A: Capital budgeting techniques are methods used by businesses to evaluate and select investment…
Q: 14) Dixon Shuttleworth has been offered the choice of three retirement-planning investments. The…
A: Future value is the value of annuity on future date compounded at a interest rate for the period…
Q: You decide to save $75,000 at each year-end for three years. If the interest rate is 8% compounded…
A: The FV of an investment refers to the combined worth of the cash flows of the investment assuming…
Q: Consider a firm with a contract to sell an asset for $151,000 four years from now. The asset costs…
A: Selling value =$ 151000Present Value =$ 96000Period = 4 YearsInterest Rate = 13%Profit / (Loss ) =…
Q: A U.S. firm holds an asset in France and faces the following scenario: State 1 State 2…
A:
Q: Current Attempt in Progress Lisa Anderson wants to invest in four-year bonds that are currently…
A: Current yield of the bond is the rate of return earned on the basis of the market price of the bond…
Q: You borrow $400,000 for 30 years to purchase a house with an interest rate of 9 percent. How much is…
A: A mortgage monthly payment is the amount a borrower pays each month to repay a home loan. It…
Q: How much would you have to put down on a house costing $130,000 if the house had an appraised value…
A: Mortgage refers to a covered loan that has been taken out for the purchase of a property which…
Q: Greta has risk aversion of A 5 when applied to return on wealth over a one-year horizon. She is…
A: Capital allocation is the process of deciding how a company will invest its financial resources to…
Q: 3. A 9-year promissory note of $11000.00 with interest at 3.28% compounded qua was discounted at 6%…
A: Promissory note promises to pay the specified amount with specific interest on specified date.
Q: Given the estimated sales forecast and the estimated relationship between inventories and sales,…
A: The regression equation will help us determine the expected inventory level given the expected…
Q: Use the following information relating to a float-adjusted market-capitalization-weighted Security %…
A: The market-capitalization index is an index where the component stocks are given their weightage…
Q: You can afford to pay $560 each month for a new car. The dealership offers you a 5-year loan at 6.4%…
A: Given:M = $560 (the amount you can afford each month) r = 6.4% per year = 6.4/12 = 0.5333% per month…
Q: You often travel to Japan and Australia and you need to exchange Japanese and Australian currencies.…
A: The Foreign Exchange rate is the exchange rate at which one country's currency exchanges with…
Q: Lohn Corporation is expected to pay the following dividends over the next four years: $11, $9, $5,…
A: Dividend for year 1, D1 = $11Dividend for year 2, D2 = $9Dividend for year 3, D3 = $5Dividend for…
Q: Which of the following is true? The component of the current account include direct foreign…
A: A is incorrect. Direct foreign investment and portfolio investment are components of the capital…
Q: A sum of $100,000 was invested into an account for six months. An amount equal to $120,000 was…
A: Initial Investment = P0 = $100,000Maturity value = P(t) = $120,000No of months = t = 6 months or 0.5…
Q: Which of the following is not a requirement of a "qualified" long-term care insurance policy? The…
A: Long-term care insurance is a policy that provides coverage for the costs associated with extended…
Q: Mikkelson Corporation's stock had a required return of 13.00% last year, when the risk-free rate was…
A: First we need to use CAPM model to calculate beta from equation. Required rate of return = Risk free…
Q: If you put up 23,000 today in exchange for a 6 percent, 10-year annuity, what will the annual cash…
A: Invested Amount = $ 23000Interest Rate = 6% Compounded AnnuallyPeriod = 10 YearsAnnual Cash Flow = ?
Q: What is the modified internal rate of return (MIRR) of each project? O MIRRS= 40.55%; MIRRL = 6.35%…
A: MIRR stands for Modified Internal Rate of Return. It is a financial metric used to evaluate the…
Q: Future Value of Multiple Annuities Assume that you contribute $110 per month to a retirement plan…
A: We need to use future value of ordinary annuity formula to calculate value of of your retirement…
Q: A company currently pays a dividend of $3.2 per share (D0 = $3.2). It is estimated that the…
A: Expected Return = Risk Free + Beta * ( Market Return - Risk Free Return )…
Q: NoGrowth Corporation currently pays a dividend of $0.49 per quarter, and it will continue to pay…
A: As per dividend discount model, the current stock price is
Q: Create a single-variable data table in Excel highlighting the monthly payment as a function of the…
A: We can determine the monthly payment using the excel function PMT(). PMT requires the following…
Q: You want to buy a house that costs $320,000. You will make a down payment equal to 20 percent of the…
A: The loan amount is calculated below
Q: n you handwrite this or type it instead of using excel
A: According to the expectation theory short term interest rate should be in line with long term…
Q: For Cash flow to creditors, why did you add it? Isn't CFC= Interest- Long Term Deb
A: First let us define what cash flow to creditors is. CFC is the net cash outflows that a company pays…
Q: Bob has been investing $5,000 in stock at the end of every year for the past 12 years. If the…
A: The formula for calculating the future value of annuity is
Q: What is the present value of an $800 perpetuity if the interest rate is 8%? If interest rates…
A: Present value of perpetual cash flows is computed by following formula:-PV = wherePV = Present value…
Q: You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for…
A: To protect yourself from a potential drop in land value, you want to purchase a financial instrument…
Q: Calculate the semi-annual lease payment assuming that the payment is made at the end of the period.…
A: Semi-annual lease paymentA recurring payment made every six months as part of a lease agreement is…
Q: Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects…
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: What is the required rate of return on C&J's stock? Do not round intermediate calculations. Round…
A: Growth= 5%Dividend yield= 8%.Dividend (D0)= $2.75g0,1 = 50%g1,2 = 30%Dividend growth after year 2=…
Q: Johnny and June would like to begin saving for their children's college education. They have four…
A: The future cash flows are: In year 0-3 = $0In year 4-6 = $22,000In year 7 = $44,000In year 8-10 =…
Q: Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities. Assume…
A: Yield to Maturity (YTM) is a financial term used to describe the total return an investor can expect…
Q: onsider the following pair of mortgage loan options for a $120,000 mortgage. Which mortgage loan has…
A: Mortgage loans are secured loans in which home is collateral and are paid by equal monthly…
Q: LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm experiences…
A: Here, ParticularsValuesDebt-equity ratio1.00Face value of the bonds $ 1,000.00Annual…
Q: In 2021, a standard 30-year fixed mortgage in the US could be had for somewhere around 3%. Following…
A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…
Q: This morning I ordered my standard coffee refill from the Global Cafe for $1.09 (it is a lot cheaper…
A: Future value is the value of future cash flows or savings when invested at an interest rate for a…
Introduction and explanation and show work without plagiarism please
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Acme Chemical, Inc. is a major manufacturer of chemical products for the agricultural ndustry, including pesticides, herbicides and other compounds. Due to a number of law suits elated to toxic wastes, Acme Chemical has recently experienced a market re-evaluation of its common stock. The firm also has a bond issue outstanding with 10 years to maturity and an annual coupon rate of 5 percent, with interest paid semi annually. The required nominal market annual interest rate on this bond has now risen to 10 percent due to the high risk level associated vith this firm. The bonds have a par or face value of $1,000. 1. Label each of the variables that you would use to determine the value of this bond in the market today: N (time periods until maturity) PMT (periodic interest payment) I per (periodic market interest rate) EV (future value to be received when the bond matures) = 2. Based on the variables that you have identified in Question #1, what is the market value. today (the present…INV3 P1a Bond # 1 2 3 4 1 - year strip bond 2- year strip bond 2-year 6% coupon bond 2-year 7% coupon bond Purchase Price for the bond) 950 ? ? ? Year 1 cash flow 1000 0 60 70 Year 2 cash flow 0 1000 1060 1070 Yield to Maturity ? ? 5.50% ? Fill in the missing pieces from the following table using the Law of One Price. Assume all these bonds have the same risk, the yield curve is flat, and any coupon payments are paid annually.2 3 Į Using Excel functions to compute duration Bond duration Settlement date Maturity date Coupon rate (decimal) YTM Coupons per year Macaulay duration Modified duration 7/20/2020 7/20/2023 8.00% 10.00% 1 % =DURATION =MDURATION
- a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.Question two Using the following data, estimate the new bond prices of each of the 3 bonds if their yields (interest rates) increase by 0.3%. You should take into account both duration and convexity. Company Maturit Coupo Payment Duratio Yield y Date frequency BP Rio Tinto 2033 Severn Trent 2021 ΔΡ P 2058 n 3.561% Semi- annual 6.125% semi-annual 12.89 n 1.457% semi-annual 24.053 -×100 = (– D™ × Ay×100) + m 8.217 2 The percentage change in the bond price is estimated: 3.11% 78.935 Convexity 4.635% 229.86 4.773% 878.73 ×Convexity× (Ay)² × 100 Bond Price (TZS) 104.52 120.36 37.9212345 A B C This first table describes prevailing market interest rates. Market Data Yield 0.05 6 7 Required: 8 D E F G H 9 Using the yield above and the information contained in the table below, please calculate the price and duration of the bond as well as all necessary steps. 10 (Use cells A5 to B5 from the given information to complete this question.) 11 12 Time Until Payment Payment Discounted Payment Weight Time x Weight 13 1.00 $30.00 14 2.00 $30.00 15 3.00 $30.00 16 4.00 $1,030.00 17 Price: 18 Duration
- INV3 P1b Bond # 1 2 3 4 1 - year strip bond 2- year strip bond 2-year 6% coupon bond 2-year 7% coupon bond Purchase Price for the bond) 950 ? ? ? Year 1 cash flow 1000 0 60 70 Year 2 cash flow 0 1000 1060 1070 Yield to Maturity ? ? 5.50% ? If the expectations theory of the yield curve is correct, what is the market expectation of the price that bond #3 will sell for next year?Question a The following data relate to a corporate bond which pays coupons semi-annually:Settlement date 01 March 2020Maturity date 31 December 2040Coupon rate 12%Yield to maturity 10%Face value $1,000Percentage of face value paid back to the investor on maturity 100%Using the above data, calculatei. The flat price of the bondii. Accrued interestiii. Invoice price of the bond Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line. .A B C D E The following tables contain coupon, pricing, and other information for a series of bonds with different maturities. Bond Characteristics Settlement date Bond A 3/15/2023 Maturity date 11/14/2027 Bond B Bond C Bond D 3/15/2023 3/15/2023 3/15/2023 11/14/2027 11/14/2047 11/14/2047 Annual coupon rate 4.00% 4.00% 7.50% 7.50% Yield to maturity 5.00% 5.00% 5.00% 5.00% Redemption value (% of face value) 100 100 100 100 Coupon payments per year 1 2 1 2 Required: Note: Use cells A2 to E10 from the given information to complete this question. Using the information above, please calculate the flat (or quoted) price as well as days since last coupon, days in a coupon period, accrued interest, and finally the invoice price. All prices are expressed as percent of par. Flat price (% of par) Days since last coupon Days in coupon period Accrued interest (% of par) Invoice price (% of par) Bond A Bond B Bond C Bond D F
- ok ht nces You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 6.152 6.153 Maturity Month/Year May 35 May 38 May 44 Bid Asked Change 103.4586 103.5314 +.3274 104.4926 104.6383 +.4269 ?? +.5379 ?? Yield to maturity Ask Yield 5.959 ?? 3.991 In the above table, find the Treasury bond that matures in May 2038. What is your yield to maturity if you buy this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.INV3 P1c Bond # 1 2 3 4 1 - year strip bond 2- year strip bond 2-year 6% coupon bond 2-year 7% coupon bond Purchase Price for the bond) 950 ? ? ? Year 1 cash flow 1000 0 60 70 Year 2 cash flow 0 1000 1060 1070 Yield to Maturity ? ? 5.50% ? If the liquidity preference theory is correct and you believe that the liquidity premium is 1 percent, what is the market expectation of the price that bond #4 will sell for next year?Which bond should an investor choose: Dollar-denominated bond Euro-denominated bond i$ = 6% i€ = 8% spot exchange rate = .90 euro/$1 expected future spot exchange rate = .96 euro/$1 Assume a 1-year time horizon. Show all calculations. Also, explain in words.