Vic Zaloom bought a corporate bond from IBEM Corporation for $100,000. The face value of the bond is $100,000 and will mature in twenty years. A $2,500 dividend is expected to be paid every quarter. If Vic plans to keep the bond until maturity, determine the effective rate of return he is getting on this investment. A. 10.38% B. 10.00% C. 12% D. 9.15%

Vic Zaloom bought a corporate bond from IBEM Corporation for $100,000. The face value of the bond is $100,000 and will mature in twenty years. A $2,500 dividend is expected to be paid every quarter. If Vic plans to keep the bond until maturity, determine the effective rate of return he is getting on this investment. A. 10.38% B. 10.00% C. 12% D. 9.15%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 17P

See similar textbooks

Similar questions

3. Assume you purchased a bond for $9,186. The bond pays $300 interest every six months. You sell the bond after 18 months for $10,000. Calculate the following: a. Income. b. Capital gain (or loss). c. Total return in dollars and as a percentage of the original investment. Review Only Click the icon to see the Worked Solution. a. The current income is $ (Round to the nearest dollar.) b. The capital gain (or loss) is $ (Enter a loss as a negative number and round to the nearest dollar.) c. The total return in dollars is $ (Round to the nearest dollar.) The total return as a percentage of the original investment is %. (Enter as a percentage and round to two decimal places.)
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 $1000? a. Rate of return____% b. Suppose under the terms of thebond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until the date. How much would the bond be worth at that time? b. Bond value_____ c. In 2024 instead of cashing in the bond for its then current value you decide to hold the bond until it mature in 2043. What annual rate of return will you earn over the last 19 years? c. Rate of return___%
Last year, Sally purchased a $1,000 face value corporate bond with an 11.2 percent annual coupon rate and a 12-year maturity. At the time of the purchase, it had an expected yield to maturity of 11.9 percent. If Sally sold the bond today for $949.88, what rate of return would she have earned for the past year? a. 11.02% b. 11.20% c. 11.10% d. –0.69% e. 10.51%
Clear my choice Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. What is the price expected to be in year 4? O a. $10 O b. $50.50 c. $41.6 O d. $40 Clear my choice 11 intend to purchase a 10-year $1.000 face value bond that pays interest of $60 every
You're considering an investment in 10-year, $1,000 face value bonds that pay 8.50% annually and sell for $1,033.55. If you do make the purchase, how much will you earn? Select one: O a. 8.00% O b. 8.50% Oc. 7.59% Od 8.25% Oe. 8.86% Clear my choice A
D $1,000 Last year Janet purchased a face value corporate bond with a 10%. annual coupon rate and a 10-year maturity. At the time of the purchase, it had an expected yield to maturity of 9,33%. If Janet sold the band fuday for $1,067.87, what rate of return would She have earned for the past year?
An investor wishes to invest $200,000 in bonds that mature in 4 years Question 3. and earn a yield to maturity of at least 3% per year. Currently she can buy 4 year treasury bonds at $102 per bond that have a yield to maturity of 2%. She decides to also buy some 4 year corporate bonds at $90 per bond that have a yield to maturity of 4%. Find the four year growth factor for each type of investment and derive the equations that must hold if her portfolio has the desired yield to maturity, How many corporate bonds, and how many 4 year treasuries, should she buy to ensure this? Give an answer in integers. Then determine how much of each type of bond she buys and what the total cost actually is. What will be the actual value of this portfolio after 4 years and what is the actual annual yield?
Please solution this question
Me be Happy with calculation
You plan to invest in securities that pay 8.0%, compounded annuallyIf you invest $5,000 today, ho many years will it take for your investment to hrow to $7466.44 5.14 5.71 6.35 7.05 7.14
eston Help A firm raises capital by selling $28,000 worth of debt with flotation costs equal to 1% of its par value. If the debt matures in 15 years and has an annual coupon interest rate of 7%, what is the bond's YTM? The bond's YTM is %. (Round to two decimal places.) Тext dia Librai l Calculat r Resource Enter your answer in the answer box and then click Check Answer. ic Study Check Answer Clear All es All parts showing nunication Tools > This course (Introduction to Finance (EIN-101-D02) Distance Spring 2021) is hased on 7utter/Smart- Drincinles of Managerial Finance Rrief Re 4/1. P Type here to search insert
Cardi is thinking of investing in a zero-coupon bond that sells for $250. At maturity in 16 years, it will be redeemed for $1,000. What approximate annual rate of growth does this represent? a. 8% b. 9% c. 12% d. 25%