Business
Business, 31.03.2020 01:01, hollybell1213

Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $89.75, while a 2-year zero sells at $79.88. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 10% per year.

a. What is the yield to maturity of the 2-year zero

b. What is the yield to maturity of the 2-year coupon bond?

c. What is the forward rate for the second year?

d. If the expectations hypothesis is accepted, what are (1) the expected price of the coupon bond at the end of the first year and (2) the expected holding-period return on the coupon bond over the first year?

e. Will the expected rate of return be higher or lower if you accept the liquidity preference hypothesis?

Higher

Lower

answer
Answers: 2

Other questions on the subject: Business

image
Business, 22.06.2019 02:30, kseniyayakimno
Luc do purchased stocks for $6,000. he paid $4,000 in cash and borrowed $2,000 from the brokerage firm. he bought 100 shares at $60.00 per share ($6,000 total). the loan has an annual interest rate of 8 percent. six months later, luc do sold the stock for $65 per share. he paid a commission of $120 and repaid the loan. his net profit was how much? pls
Answers: 3
image
Business, 22.06.2019 16:50, cutebab4786
Slow ride corp. is evaluating a project with the following cash flows: year cash flow 0 –$12,000 1 5,800 2 6,500 3 6,200 4 5,100 5 –4,300 the company uses a 11 percent discount rate and an 8 percent reinvestment rate on all of its projects. calculate the mirr of the project using all three methods using these interest rates.
Answers: 2
image
Business, 23.06.2019 10:20, abadir2008
Global tek plans on increasing its annual dividend by 15 percent a year for the next four years and then decreasing the growth rate to 2.5 percent per year. the company just paid its annual dividend in the amount of $.20 per share. what is the current value of one share of this stock if the required rate of return is 17.4 percent? $1.82 $218 $2.03 $2.71 $3.05
Answers: 1
image
Business, 23.06.2019 16:30, myg21
Knight company reports the following costs and expenses in may. factory utilities $17,400 direct labor $70,300 depreciation on factory equipment 13,850 sales salaries 46,700 depreciation on delivery trucks 3,900 property taxes on factory building 3,100 indirect factory labor 53,700 repairs to office equipment 1,500 indirect materials 84,200 factory repairs 2,220 direct materials used 137,700 advertising 15,900 factory manager’s salary 8,700 office supplies used 2,770 from the information: your answer is incorrect. try again. determine the total amount of manufacturing overhead. manufacturing overhead $ 173050 link to text your answer is incorrect. try again. determine the total amount of product costs. product costs $ 208000 link to text your answer is incorrect. try again. determine the total amount of period costs. period costs $ 66870 click if you would like to show work for this question: open show work
Answers: 2
Do you know the correct answer?
Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $89.75, while a 2-yea...

Questions in other subjects:

Konu
Geography, 05.01.2020 20:31