Can you show me steps on how
to solve this, please? Thank you!
Homework Answers
Total return = real rate of return + inflation premium + risk premium
Total return = 4% + 5% + 2% = 11%
Coupon = 0.13 * 1,000 = 130
New price of bond = Coupon * [1 - 1 / (1 + r)n] / r + FV / (1 + r)n
New price of bond = 130 * [1 - 1 / (1 + 0.11)20] / 0.11 + 1,000 / (1 + 0.11)20
New price of bond = 130 * 7.963328 + 124.033907
New price of bond = $1,159.27
Keys to use in a financial calculator: FV 1000, PMT 130, N 20, I/Y 11, CPT PV
Add Answer to:
Can you show me steps on how
to solve this, please? Thank you!
3· value: 2.27...
Media Bias Inc. issued bonds 10 years ago at $1,000 per bond. These bonds had a...
Media Bias Inc. issued bonds 10 years ago at $1,000 per bond. These bonds had a 40-year life when issued and the annual interest payment was then 12 percent. This return was in line with the required returns by bondholders at that point in time as described below: Real rate of return 3 % Inflation premium 5 Risk premium 4 Total return 12 % Assume that 10 years later, due to good publicity, the risk premium is now 3 percent...
Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a...
Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 40-year life when issued and the annual interest payment was then 13 percent. This return was in line with the required returns by bondholders at that point in time as described below: Real rate of return 7 % Inflation premium 3 Risk premium 3 Total return 13 % Assume that 10 years later, due to bad publicity, the risk premium is now 8 percent...
Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a...
Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the ann interest payment was then 9 percent. This return was in line with the required returns by bondholders at that point in time as described below: Real rate of return Inflation premium Risk premium Total return mm Assume that 10 years later, due to bad publicity, the risk premium is now 7 percent and is appropriately reflected in...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return Inflation premium Risk premium 3% 6 5 14% Total return Assume that five years later the inflation premium is only 2 percent and is appropriately reflected in the required...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 13 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return 4 % Inflation premium 5 Risk premium 4 Total return 13 % Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in...
und and the annual interest payment was then 11 peront. T u rn was inne with...
und and the annual interest payment was then 11 peront. T u rn was inne with the required Wison Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 30 year life when returns by bondholders at that point in time as described below Heval rate of retum Intation premium Risk premium Total retum Assume that 10 years later, due to bad publicity, thensk premium is now 7 percent and is appropriately reflected in the...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 15 percent. This return was in line with the required returns by bondholders at that point as described below: 5% Real rate of return Inflation premium Risk premium Total return 15% Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 15 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return 5 % Inflation premium 6 Risk premium 4 Total return 15 % Assume that five years later the inflation premium is only 2 percent and is...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return Inflation premium Risk premium Total return 38 6 5 148 Assume that five years later the inflation premium is only 2 percent and is appropriately reflected in the required...
Tom Cruise Lines Inc. Issued bonds five years ago at $1000 per bond. These bonds had...
Tom Cruise Lines Inc. Issued bonds five years ago at $1000 per bond. These bonds had a 25- year life when issued and the annual interest payment was then 13 percent. This return was in line with the required returns by bondholders at that point as described below 5 l rate of inflation premiun Risk preniun Total returs 139 eBlook Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required retum...
Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the ann interest payment was then 9 percent. This return was in line with the required returns by bondholders at that point in time as described below: Real rate of return Inflation premium Risk premium Total return mm Assume that 10 years later, due to bad publicity, the risk premium is now 7 percent and is appropriately reflected in...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return Inflation premium Risk premium 3% 6 5 14% Total return Assume that five years later the inflation premium is only 2 percent and is appropriately reflected in the required...
und and the annual interest payment was then 11 peront. T u rn was inne with the required Wison Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 30 year life when returns by bondholders at that point in time as described below Heval rate of retum Intation premium Risk premium Total retum Assume that 10 years later, due to bad publicity, thensk premium is now 7 percent and is appropriately reflected in the...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 15 percent. This return was in line with the required returns by bondholders at that point as described below: 5% Real rate of return Inflation premium Risk premium Total return 15% Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or...
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return Inflation premium Risk premium Total return 38 6 5 148 Assume that five years later the inflation premium is only 2 percent and is appropriately reflected in the required...
Tom Cruise Lines Inc. Issued bonds five years ago at $1000 per bond. These bonds had a 25- year life when issued and the annual interest payment was then 13 percent. This return was in line with the required returns by bondholders at that point as described below 5 l rate of inflation premiun Risk preniun Total returs 139 eBlook Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required retum...
Most questions answered within 3 hours.
-
Although Epicurus advocates pursuing pleasure for the
good life, discuss a few reasons why he does...
asked 15 minutes ago -
Problem 1: Present entries to record the selected transactions
described below:
(a)
Issued $2,790,000 of 5-year,...
asked 21 minutes ago -
Using technology to support HR activities increases:
a.
the efficiency of the administrative HR functions.
b....
asked 22 minutes ago -
1. List the features used to classify leaf
types.
2. List some characteristics that are shared...
asked 27 minutes ago -
The three elements of Value Proposition, Key Customers, and
Capabilities operate within an environment. Which of...
asked 29 minutes ago -
Katelynn, a physician, earns $200,000 from her medical practice
in the current year. She receives $45,000...
asked 37 minutes ago -
Each row of the table below describes an aqueous solution at
25°C
.
The second column...
asked 41 minutes ago -
A horizontal wire is at y = 0. Current travels in the +x
direction. The magnetic...
asked 41 minutes ago -
Let X be a continuous random variable whose PDF is Let X be a
continuous random...
asked 1 hour ago -
Martinez Company’s relevant range of production is 7,500 units
to 12,500 units. When it produces and...
asked 1 hour ago -
A football with a mass of 1.2 kg is kicked from ground level to
a height...
asked 1 hour ago -
Remember: Changes in supply determinants shift supply, and
changes in demand determinants shift demand. We say...
asked 1 hour ago