You plan to reinvest the coupon interest at 12% rate of return per annum. Calculate the value of the reinvestment, what is the figure will you get at the end of 7th years with your principle. Face value = RM1000 Maturity = 6 years Coupon = 5% Bond value= RM1020

Q: What would be the annual average return for an investor that is requiring 4.5X after 3.5 years?

A: After 3.5 years required 4.5 times of initial investment.

Q: What is the price of a $1,000 zero-coupon bond

A: Bonds are financial instruments that provide fixed returns to their holders. Bonds actually have a…

Q: A real estate broker has a listing where the seller agreed to should capital gains tax and broker's…

A: Given:  Commission Rate: 5%  Net Proceeds Required After Tax: P4,895,000 Capital Gain Tax : Assumed…

Q: hat is the present value of CD with 4% annual interest that matures in 1 year with a value of $3000?…

A: We can determine the PV of an amount using the formula below: PV = FV(1+r)n Where FV = future value…

Q: Suppose we have a 5-year investment horizon and we consider a 10-year 12% coupon bond with face…

A: Total return on any investment is the sum total of all the return earned through-out the tenure of…

Q: You purchase a 20 year semi annually 9% coupon bond with an 11% YTM today. In one year you sell. If…

A: In a sale purchase transaction of a bond, we have to find the 1 year holding period return (HPR).

Q: ou buy a bond today. The bond has a face value of $1000, will mature in 10 years, and pays coupon on…

A: Given: Face Value of bond “FV” = $1000 Annual coupon rate = 8% Annual Coupon “PMT” = 8%*1000 =$80…

Q: You buy a 6 yearbond with an annual 8% coupon at par value, $1000. If the yield tomaturity at the…

A:

Q: What would be the price of 10 years bond with face value Rs 1000, coupon rate of 10% and required…

A: Bond is a fixed income instrument, debt instrument by investor to a borrower.

Q: What's the value to you of a $1,000 face-value bond with an 10% annual coupon rate and 6 years to…

A: Given, face value of bond is $1000 Annual coupon 10% Term to maturity is 6 years.

Q: What is the market value of Beril Gıda A.Ş.'s bond with a nominal value of USD 12,000, maturity of 5…

A: The price of the bond is equivalent to the sum of the present value of coupon payment plus the…

Q: A put gives the owner the right Select one: a. But not the obligation to sell an asset at a given…

A: This flexibility allows investors to protect their portfolios from potential downside risk (hedging)…

Q: You attempt to finance a 10-year guaranteed investment contract (GIC). The payment made by…

A: given   GIC is 5%. The bond you want to use is a 15-year, 5% annual coupon rate bond (semiannually…

Q: What would be the price of 10 years bond with face value Rs 5000, coupon rate of 10% and required…

A: One of the methods of bond valuation is the discounting cash flow method. Under this method, all the…

Q: What if I created a financial instrument which offered interest once every 2 years? To explore the…

A: Financial instrument is a financial security through which an amount is invested for the period.…

Q: A zero coupon bond will be worth $15,000 when it matures and redeemed after 10 years. How much would…

A: This question requires us to calculate Present Value of a zero coupon bond which will be worth $…

Q: 7. How many years would it take for money to triple in value at 20% per yea simple interest?

A: Let the principal be x And the amount be 3x Simple interest=Amount-principal…

Q: ,000 Par Disney bond has a 4% coupon and will mature in 10 years.   If its yielding (YTM) 5% when…

A: Price of bond is sum of present value of coupon payment and present value of par value.

Q: Wells Fargo offers a new savings product: You make the following payments over the next 5 years and…

A: Future value is computed by following formula:-FV = A*(1+r)nwhereFV = future valueA = amount…

Q: You are considering the purchase of a new issue of bonds which will mature in 10 years.  The coupon…

A: Using Excel PV function

Q: Consider a 1-year, 10% annual payment corporate bond priced at par value. If the recovery rate is…

A: Expected loss given default would be loss to be incurred by investor when issuer fails to repay the…

Q: What is the present value of a security that will pay $10,000 in 5 years if securities of equal risk…

A: Present value (PV) is a financial concept used to determine the current worth or value of a sum of…

Q: For a quoted annual interest rate of 5% with daily compounding, find the effective (i) annual rate,…

A: Present value refers to the current value of the annuity that is determined by discounting the cash…

Q: What is the future value of $1,250.63 for 3 years at an interest rate of 7%?

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Compute the price of a 5-year 6.4% coupon with par value if 100$ that pays interest annually…

A: Bond valuation (BV) refers to a method or technique which is used to compute the current value or…

Q: If a coupon bond that is going to mature in two years is selling at par. Suppose its coupon rate is…

A: Given, Coupon payment is $100 Yield to maturity  at beginning is 10% Yield to maturity at end is 5%…

Q: The company SunInc wants to launch a new product and therefore needs to raise new financing. SunInc…

A: Solution:- Yield to maturity is the rate of return earned by the bond holder, if he holds the bond…

Q: Time value of money practice problems.  How would you solve these using a financial calculator?…

A: The computation of the Future value as follows:

Q: The following spot rates are observed today. Maturity Spot rate (%) 1 year 0.75 2 year 1.50 3 year…

A: Managing interest rate expectations is crucial for making informed investment decisions. The spot…

Q: If the current price is $900; 10% coupon; maturity=15 years; what is the YTM

A: The YTM of the bond can be calculated as per the RATE function of Excel

Q: 6. a) Suppose we have a 5-year investment horizon and we consider a 10-year 12% coupon bond with…

A: here is the formula to calculate interest compounded at reinvestment rate and the value of total…

Q: In this problem: How much is the present value of monthly deposits of 500 in 8 years if the interest…

A: The present value of the amount represents the current value of the future cash flows. The…

Q: 15. An investment has an NOI of $40,000. There is market rate mortgage financing available for 75%…

A: Weighted mortgage rate = % of mortgage finance available * cost of raising…

Q: What would be its price 10 years from now, if the required rate of return at the end of 10 years…

A: The bond is a fixed-income security that promises the investor to pay defined coupon payments for…

Q: A 330-day T-Bill is currently selling at a discount rate of 3.97%. What will be the price of the…

A: The below expression can be used to calculate the current price of T-bill:

Q: What is the future value of $2,425 per year for 13 years at an interest rate of 6.57%? MUST USE…

A: Here amount is deposited each year which is a uniform series of deposits called annuity . We will…

Q: Assume you can buy a bond that has a par value of $1000, matures in 10 years, yielding 6% and has a…

A: Bonds are the debt security which is issued by the corporations or the government to arrange the…

Q: What is the present value of a security that will pay $6,000 in 20 years if securities of equal risk…

A: Present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Q: What is the present value of a security that will pay $18,000 in 20 years if securities of equal…

A: Present value is the value of the money in current time that is expected to be received in future…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.