The British government has a consol bond outstanding paying £400 per year forever. Assume the current interis 8% per year.a. What is the value of the bond immediately after a payment is made?b. What is the value of the bond immediately before a payment is made?a. What is the value of the bond immediately after a payment is made?The value of the bond immediately after a payment is made is £b. What is the value of the bond immediately before a payment is made?The value of the bond immediately before a payment is made is £(Round to the nearest pound.)(Round to the nearest pound.)

Bonds is a type of security where the issuer is liable for the debt taken by him. The issuer needs…

Answered: at is the value of the bond immediately…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

The British government has a consol bond outstanding paying £100 per year forever. Assume the current interest rate is 8% per year. a. What is the value of the bond immediately after a payment is made? b. What is the value of the bond immediately before a payment is made? a. What is the value of the bond immediately after a payment is made? The value of the bond immediately after a payment is made is £ (Round to the nearest pound.) b. What is the value of the bond immediately before a payment is made? The value of the bond immediately before a payment is made is £ . (Round to the nearest pound.)
Suppose a U.S. government bond pays $2,155.40 in 5 years at 6% interest. Calculate the present value of the bond.
The British government has a consul bond outstanding paying £100 per year forever. Assume the current interest rate is 4% per year. What is the value of the bond immediately after a payment is made? What is the value of the bond immediately before a payment is made?
A bond pays P342 interest per year and has face value of P9,813 at the end of 6 years, when it has to be redeemed. If the interest of the bond is 0.19. What is the current value of the bond?
A bond promises to pay $150 in one year. What is the interests rate on the bond if its price today is $65,$75 and $85?
Suppose the U.S. Treasury offers to sell you a bond for $687.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?
The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?
You have purchased a U.S. Treasury bond for $3,000. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $5,000. What interest rate will you earn on this bond? 3.82% 4.25% 4.72% 5.24% 5.77%
If a one-year bond with a face value of $100 (the bond pays the bearer $100 one year from now) sells today for $85, what is the interest rate on the bond? 0 15% 17.6% 1.18% It depends on what the Federal Reserve sets as its target rate for the Federal Funds Rate.
2. The British government has a bond outstanding that pays £100 in interest each year for 18 years. Assuming that the current interest rate in Great Britain is 5% and that you will receive your first interest payment next year. What is the value of the government bond if norminal value of the bond is £1,000? a. £1,585 b. £1,000 c. £2,800 d. £1,169
The U.S. Treasury offers to sell you a bond for $585.43. No payments will be made untilthe bond matures 10 years from now, at which time it will be redeemed for $1,000.What interest rate would you earn if you bought this bond for $585.43? What ratewould you earn if you could buy the bond for $550? For $600? (5.5%, 6.16%, 5.24%)
Suppose that a one-year Treasury bond has a face value of $110,000.00 and is currently selling in the bond market for $100,000.00. This bond is safe, because the U.S. Treasury never defaults on its promises. For the sake of this question (and to make life easier for all of us), assume that the face value and the price of this bond will remain the same throughout the story. The Treasury issues another one-year bond with a face value of $174,900.00 and a starting price of $170,000. However, nobody buys this bond. People believe it is too expensive. (Why do you think they believe this is expensive?) Consequently, the price of this bond in the bond market drops to..... dollars

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS