(Answered) Last year the company issued a 4-year bond with a 1000 face

Finance

Last year, the company issued a 4-year bond with a $1,000 face value and $30 annual coupon (paid semiannually). Upon the issuance, the bond was traded exactly at the price of $1,000.00. Between last year and this year, the following happened (a) the company's default spread stayed the same (b) US inflation expectation for the time the bond will be issued increased from 0.5% per year to 4.5% per year. The current price of the bond must be?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92722221
Price:- $20

Verified Expert

Priced at $40 Now at $20, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Question - four days ago you entered into a futures

Question - Four days ago you entered into a futures contract to buy €125,000 at $1.10 per euro. The spot exchange rate when you entered the contract was $1.07. Your initial performance bond was $5,800 and your maintenanc ...

Suppose your company is expected to grow at a constant rate

Suppose your company is expected to grow at a constant rate of 6% forever and its dividend yield is expected to be 8% with a dividend payout of $1.06 at the end of the year. What is the value of your firm's stock?

What are the different types of survey research error and

What are the different types of survey research error and describe an example of each.

Franks is looking at a new sausage system with an installed

Franks is looking at a new sausage system with an installed cost of $375,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped ...

Your company is considering a new project that will require

Your Company is considering a new project that will require $18,000 of new equipment at the start of the project. The equipment will have a depreciable life of 5 years and will be depreciated to a book value of $3,000 us ...

A suppose you purchase a 3-year zero-coupon bond with face

(a) Suppose you purchase a 3-year zero-coupon bond with face value of $1000 and a price of $850. What is the bond's yield? If you hold the bond to maturity, what will be your effective annual return? (b) Now suppose you ...

Taking out an 800000 30-year loan with equal monthly

Taking out an $800,000 30-year loan with equal monthly payments with annual rates is 3.6% (i) calculate the amount of interest that will be paid in the first month of the 25th year into the loan. List the steps formulas ...

How to find the amount of us dollars needed to purchase 1

How to find the amount of US dollars needed to purchase 1 swiss franc if the exchange rate is 0.9897 Swiss francs per U.S. dollar A trip to Japan is estimated to cost$606. How many yen do you need to buy if the exchange ...

When when is it appropriate to use the wac as the discount

When when is it appropriate to use the wac as the discount rate in capital budgeting

You invested 12000 in a stock that has an expected return

You invested $12,000 in a stock that has an expected return of 18% and $21,000 in a stock with an expected return of 10%. What is the portfolio's expected return?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert