Question you own a 20-year 1000 par value bond paying 8, Ask an Expert

Finance

Question: You own a 20-year. $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $850. and your required rate of return is 11 percent.

a. Compute the bond's expected rate of return.

b. Determine the value of the bond to you. given your required rate of return.

c. Should you sell the bond or continue to own it?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92762026

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Explain how the company newmans own brand fulfills the

Explain how the company Newman's Own brand fulfills the definition of a business for profit and a non-profit business at the same time. Consider in the response the functions of business, entrepreneurship and production ...

Chiefland campers is evaluating a project that will not

Chiefland Campers is evaluating a project that will not affect revenues, but will save the firm $110,000 per year in before-tax operating costs, excluding depreciation. The project's depreciable basis is $840,000, and it ...

If you buy a bond for a discount is your yield-to-maturity

If you buy a bond for a discount, is your yield-to-maturity higher, lower or the same as the going market interest rates?

Your goal is to save 1000000 at retirement in 5 years you

Your goal is to save $1,000,000 at retirement in 5 years. You expect you can earn 12.50% over the next 5 years. How much money do you have to save on an annual basis to reach your goal?

Calculating returnssuppose you bought a bond with a 58

Calculating Returns: Suppose you bought a bond with a 5.8 percent coupon rate one year ago for $1,030. The bond sells for $1,059 today. a. Assuming a $1,000 face value, what was your total dollar return on this investmen ...

Today you opened up a local bank account your plan is to

Today you opened up a local bank account. Your plan is to make five $4,000 contributions to this account. The first $4,000 contribution will occur today and then every six months you will contribute another $4,000 to the ...

Would you pay 23 for a share of common stock that just paid

Would you pay $23 for a share of common stock that just paid a $1.65 dividend, its expected growth rate is 4% and your required return is 11%?

What is the relation between a corporate bonds expected

What is the relation between a corporate bond's expected return and the yield to maturity? definition of default risk and explanation of how these rates incorporate default risk.

Describe the theoretical problems of ethics 3 the

Describe the theoretical problems of ethics (3), the objectives to solving them.

If you deposit 970 every year for the next 6 years with

If you deposit $970 every year for the next 6 years, with first deposit to be made today and all deposits to be made at the beginning of every year, in an account that pays 8.01% APR with annual compounding, how much is ...

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