In March 2018 Daniela Motor financing dmf offered some securities for sale to the public. Under the terms of the deal, dmf promised to repay the owner of one of these securities $1,000 in March 2043, but investors would receive nothing until then. Investors paid DMF $350 for each of these securites; so they gave up $350 in March 2018, for the promise of a $1,000 payment 25 years later. A. assuming you purchased the bond for $350, what rate of return would you earn if you held the bond for 25 years until it matured with a value of $1,000 ? answer= 4.28% B. Suppose under the terms of the bond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until that date. How much would the bond be worth at that time?_________ C. In 2024 instead of cashing in the bond for its then current value, you decide to hold the bond until it matures in 2043. What annual rate of return will you earn over the last 19 years?___________
In March 2018 Daniela Motor financing dmf offered some securities for sale to the public. Under the terms of the deal, dmf promised to repay the owner of one of these securities $1,000 in March 2043, but investors would receive nothing until then. Investors paid DMF $350 for each of these securites; so they gave up $350 in March 2018, for the promise of a $1,000 payment 25 years later.
A. assuming you purchased the bond for $350, what
answer= 4.28%
B. Suppose under the terms of the bond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until that date. How much would the bond be worth at that time?_________
C. In 2024 instead of cashing in the bond for its then current value, you decide to hold the bond until it matures in 2043. What annual rate of return will you earn over the last 19 years?___________
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