Ask Question
BusinessBusiness
22 June, 22:14

You want to buy a Disney bond with two years until maturity and a coupon rate of 9.50% per year, paid semiannually. FED reports that the market interest rate for similar bonds is only 3.8% per half-year. Find the bond's price today and 6 months from now after the next coupon is paid. (Do not round intermediate calculations. Round your answers to 2 decimal places.) - Current price $-Price after 6 months $ - What is the total rate of return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Total rate of return % per six months

+2
Answers (1)
  1. 23 June, 00:53
    0
    n=2*2=4

    Coupon = 0.095*1000/2=47.50

    rate = 0.038

    Using excel:

    =PV (0.038,4,47.5,1000)

    =$1,034.65

    Price after 6 months:

    n=3

    Coupon = 0.095*1000/2=47.50

    rate = 0.038

    =PV (0.038,3,47.5,1000)

    =$1,026.46

    Capital gain return:=1026.46/1034.65=-0.791%

    Coupon return = 47.5/1034.65

    =+4.591%

    Total return = 3.80%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You want to buy a Disney bond with two years until maturity and a coupon rate of 9.50% per year, paid semiannually. FED reports that the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Why do housing ads use abbreviations rather than standard english
Answers (1)
Staff turnover meaning?
Answers (1)
Pharmacie & Upjohn, a pharmaceutical company, uses a functional structure (research, development, manufacturing, and marketing) within each of its three largest major product divisions. This company is an example of a:
Answers (1)
The Great Planes radio-controlled plane company is slowly gaining in its sales. Last year the company increased its presence and share in the R/C airplane model market by 10%.
Answers (1)
Ar 7 at 6:39pm structions Question 1 Businesses engage in environmental protection activities to show their responsibility to their general public stakeholders
Answers (1)
New Questions in Business
Using the following information, what is the amount of net income? Purchases $ 33,189 Selling expenses $ 758 Merchandise inventory, September 1 7,436 Merchandise inventory, September 30 8,978 Administrative expenses 760 Sales 51,684 Rent revenue 832
Answers (1)
You are managing a project and need to cut the cost of the project. You decide to transfer workers to another job to cut the project's costs. Costs associated with transferring the workers are an example of project indirect costs. O True O False
Answers (1)
K Inc. has provided the following data for the month of May: Inventories: Beginning Ending Work in process $ 17,000 $ 12,000 Finished goods $ 46,000 $ 50,000 Additional information: Direct materials $ 57,000 Direct labor cost $ 87,000 Manufacturing
Answers (1)
Marcy Tucker received the following items this year. Determine to what extent each item is included in her AGI. (Leave no cells blank - be sure to enter "0" wherever required.) A $25,000 cash gift from her parents.
Answers (1)
Analysis of daily output of a factory during a 8-hour shift shows that the hourly number of units y produced after t hours of production is
Answers (1)
Home » Business » You want to buy a Disney bond with two years until maturity and a coupon rate of 9.50% per year, paid semiannually. FED reports that the market interest rate for similar bonds is only 3.8% per half-year.
Sign Up Forgot Password?