Question

Your financial advisor recommended that you buy some long bonds because she felt interest rates were...

Your financial advisor recommended that you buy some long bonds because she felt interest rates were going to decline. She pointed out that the price of those bonds would be more volatile than short bonds.

  • She suggested $1000 par value, 40 year zero coupon bonds offered by a local utility selling at $372.43.
  • She pointed out that the market rate of interest of 2.5% would be declining to 2% within the next 9 months based on her read of the Federal Reserve policy statements.


If her assessment is correct, what would you expect these bonds to be worth when interest rates drop to 2%. Show all your work.

0 0
Add a comment Improve this question Transcribed image text
Know the answer?
Add Answer to:
Your financial advisor recommended that you buy some long bonds because she felt interest rates were...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • HW 10 Bond Analysis and Valuation Corporate Bonds-They Are More Complex Than You Think Jill Dougherty was hired...

    HW 10 Bond Analysis and Valuation Corporate Bonds-They Are More Complex Than You Think Jill Dougherty was hired as an investment analyst by A.M. Smith Inc. for the Cincinnati, Ohio office based on her sound academic credentials, which included an MBA from a top ranking university and a CFA designation. At the time of her recruitment she was told that one of her responsibilities would be to conduct educational seminars for current and prospective clients. A.M. Smith Inc., a prestigious...

  • Complete the following Journal Entries: 1) On October 2nd, REI received the full payment (interest and...

    Complete the following Journal Entries: 1) On October 2nd, REI received the full payment (interest and principal) for the three-month $41,325 note issued on July 1st (transaction #1 – quarter 3). The interest received is for 3 months. 2) REI felt that their inventory levels were getting lower and they should purchase more units from EDL. On October 4th, REI purchased on account 500 DoorSpy units at $56 each. 3) On October 6th, Ella got a call from Larry who...

  • Hi, i just need the highlighted ones. Thank you! CHAPTER 1 Understanding Personal Finance 33 LET'S...

    Hi, i just need the highlighted ones. Thank you! CHAPTER 1 Understanding Personal Finance 33 LET'S TALK ABOUT IT 1. Economic Growth. What tpes of federal government Federal Reserve. Describe some economic circumstances that might persuade the Federal Reserve to lower short-term inter- ctfoets to help stimulate economic growth affect 2 The Business Cycle. Where is the United States in the economic cycle now, and where does it seem to be heading? List some indicators that suggest in which direction...

  • QUESTION 10 Consider the monthly data, including the estimates for March 2020, and the information in...

    QUESTION 10 Consider the monthly data, including the estimates for March 2020, and the information in the articles. Which of the following is the best analysis of and prediction for the money market in the U.S. economy for the next few months?   a. Shortages are causing panic buying by households, which has increased money demand. Lenders are increasing their lending to keep up with the needs of households and businesses. Money demand is increasing more than money supply. b. Shortages...

  • And there was a buy-sell arrangement which laid out the conditions under which either shareholder could...

    And there was a buy-sell arrangement which laid out the conditions under which either shareholder could buy out the other. Paul knew that this offer would strengthen his financial picture…but did he really want a partner?It was going to be a long night. read the case study above and answer this question what would you do if you were Paul with regards to financing, and why? ntroductloh Paul McTaggart sat at his desk. Behind him, the computer screen flickered with...

  • Select two of the discussion questions and analyze the case study using project management principles. Apply...

    Select two of the discussion questions and analyze the case study using project management principles. Apply your knowledge of project management to the facts presented in the case study to describe how you would proceed. We only need to answer one of the questions. A thorough answer will probably require 300 to 500 words for each question.   Feel free to use text bullets, tables, or graphics to summarize your points. Questions Q1: Make or Buy decision – Describe the make...

  • Entering and Contracting Contracting at Charity Medical Center Charity Medical Center (CMC), a five hundred-bed acute-care...

    Entering and Contracting Contracting at Charity Medical Center Charity Medical Center (CMC), a five hundred-bed acute-care hospital, was part of the Jefferson Hospital Corporation (JHC). JHC, which operated several long-term and acute-care facilities and was sponsored by a large religious organization, had recently been formed and was trying to establish accounting and finance, materials management, and human resources systems to manage and coordinate the different facilities of particular concern to CMC, however, was a market share that had been declining...

  • 4. Perform a SWOT analysis for Fitbit. Based on your assessment of these, what are some strategic options for Fitbit go...

    4. Perform a SWOT analysis for Fitbit. Based on your assessment of these, what are some strategic options for Fitbit going forward? 5. Analyze the company’s financial performance. Do trends suggest that Fitbit’s strategy is working? 6.What recommendations would you make to Fitbit management to address the most important strategic issues facing the company? Fitbit, Inc., in 2017: Can Revive Its Strategy and It Reverse Mounting Losses? connect ROCHELLE R. BRUNSON Baylor University MARLENE M. REED Baylor University in the...

  • Evaluate the arical writ the response in which you state your agreement or disagreement with writer...

    Evaluate the arical writ the response in which you state your agreement or disagreement with writer up un these questions guidelines 1) can empathy lead us astrary? how 2) our heart will always go out to the baby in the well, its a measure of our humanity. but empathy will have to yield to reason if humanity is to have a future can empathy yield to reason? how? thank you The Baby in the Well: The Case against Empathy* -Paul...

  • Please read the article and answer about questions. You and the Law Business and law are...

    Please read the article and answer about questions. You and the Law Business and law are inseparable. For B-Money, the two predictably merged when he was negotiat- ing a deal for his tracks. At other times, the merger is unpredictable, like when your business faces an unexpected auto accident, product recall, or government regulation change. In either type of situation, when business owners know the law, they can better protect themselves and sometimes even avoid the problems completely. This chapter...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT