1) (27 years )Express your age in years only (Forget about month and day, for ex
ID: 2619742 • Letter: 1
Question
1)
(27 years )Express your age in years only (Forget about month and day, for example if you are 22 years and 5 months and 15 days, then use 22 years. If you are 22 years and 6 month and 10 days, then use 23 years old). Assume you buy a zero-coupon bond that matures when you get to retirement age of 67. If the yield of this bond is 4% compounded semiannually, how much you must pay to buy this bond? Face value of this zero-coupon bond is $10,000
2). If you like to have $1,000,000.00 at the age of 67 (When you retire), how many of this zero-coupon bond you must buy today? Show your answer and age (Hypothetical is OK) in the discussion window and attach the Excel file.
3). Go to a stock price quote site like Yahoo/finance or NASDAQ.com, (or WSJ), choose a publicly traded stock and get its price, dividend yield, 52 weeks high and low price, its P/E ratio, and its beta. Is this stock a growth stock or value stock? What the beta of a stock mean? In order words, what does it measure?
Explanation / Answer
1.
Face Value of Bond = $10,000
Number of year remains in maturity = 27 year
Annual Yield = 4% compounded semiannually.
Present value of bond = $10,000 / (1 + 4% / 2) ^ (27 × 2)
= $10,000 / 2.9135
= $3,432.34
Present value of bond is $3,432.34.
2.
Total Taget amount = $1,000,000
Face Value of Bond = $10,000
Number of bond required to purchase = $1,000,000 / $10,000
= 100
You need to purchase total 100 bond.
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