I bought a $10,000 bond at 6% interest a year ago. What does the cash flow diagram look like today? What is the present value if the current interest rate is 6% ? What is the present value if the interest rate falls to 5% ?
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- You are considering investing in a savings bond that will pay $50,000 in 6 years. If the competitive market rate is fixed at 6% per year, what is the bond worth today?Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 10%. What is the value of this perpetuity? 5-year bond with a coupon rate of 4% has a face value of $1000. What is the annual interest payment?Suppose your bank account will be worth $4,200.00 in one year. The interest rate (discount rate) that the bank pays is 5%. What is the present value of your bank account today?
- Suppose the interest rate on a 3-year Treasury Note is 1.25%, and 5-year Notes are yielding a 3.50%. Based on the expectations theory, what does the market believe that 2 year treasuries will be yielding 3 years from now?a) You invest 155 000 TL for a year. At the end the year, you have 174 375 TL net in your account. If the inflation realizes at %10 fot this year, calculate real rate of return? Can real interest rates be negative? Give a simple example?suppose the interest rate on a 3 year treasury note is 1.00% and 5 year notes are yielding 3.50% Based on the expectatiions theory, what does the market believe that 2 year treasuries will be yielding 3 years from now?
- You are considering purchasing a bond. The bond will pay you $100 at the end of each year for three years. At the end of the third year, the bond will also pay you back its $1,000 face value. Assuming a 10% discount rate, how much is this bond worth today? Round to the nearest dollar. I am having trouble calculating how much this bond is worth today. Thank you!You purchased a P5,000 bond for P5,100. The bond pays P200 peryear. It is redeemable for P5,050 after 10 years. What is the net rateof interest on your investment? DRAW CASH FLOW DIAGRAM3. What is the present value of a $20,000 payment you would receive 5 years from now, assuming an annual interest rate of 7%? 4. What is the future value 6 years from now of $15,000 you hold today when the annual interest rate is 4%? 5. What is the current price of a discount bond with a face value of $10,000 and an interest rate of 6%? 1
- Imagine that a $10,000 ten-year bond was issued at an interest rate of 6%. You are thinking about buying this bond one year before the end of the ten years, but the interest rate a savings account pays currently is 9%. Calculate what you would be willing to pay for this bond. Suppose that the savings account interest rate is not 9%, but 7%. How much would you be willing to pay for this bond now? Compare the value of this bond under two different interest rates.suppose you own a 40-year bond that has a bond rate of 2% per year. 1. How much money will you lose if the value of the bond today is $10,000 (face value of the bond) and the yield increases to 3% ? 2. If this bond is purchased now for $5,000, what yearly yield would the buyer receive?Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.01% when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $100 face value? b. What is the internal rate of return of your investment? Note: Assume annual compounding. The cash flow at time 1-3 is $ (Round to the nearest cent. Enter a cash outflow as a negative number.) (Round to the nearest cent. Enter a cash outflow as a negative number.) The cash outflow at time 0 is $ The total cash flow at time 4 (after the fourth coupon) is $ negative number.) b. What is the internal rate of return of your investment? (Round to the nearest cent. Enter a cash outflow as a
