1 answer

Please answer all of the questions! 1. Briefly explain the cash inflows and outflows over the...

Question:

Please answer all of the questions!

1. Briefly explain the cash inflows and outflows over the life of a bond from purchase until maturity from the investor’s perspective.

2. What is the difference between the face value and the par value of a bond? Does the investor get this amount back, and if so, at what time?

3. Fill in the blanks of the following sentence. (Hint: For the first blank, choose a different answer than “future” even though “future” is technically correct): The bond price gets closer to the _______ value as the life of the bond _______.

4. Assuming equal face value and coupon payments, would an investor rather have an investment grade bond or a junk bond? Why?


Answers

Answer 1)

Cash outflows is the current purchase price of the bond
Cash inflow are
1)  The coupon payments every six months or yearly
2) The reinvestment cash inflows by investing coupon payments
3) The final face value of bond

Answer 2)

The face value or par value are same and is the amount that is given price at contract. Yes the investor gets this amount at the end of the contract ( number of years). If it is a 5 year bond then the investor receives it at the end of 5 the year. In general the face value or par value of bond is $ 1000 or $ 100.

Answer 3 )

The bond price gets closer to the maturity value as the life of the bond increases.

Answer 4)

Given equal face value and coupon payments the investor prefers investment grade bond as the returns are mostly guaranteed. The junk bonds are non investment grade bonds and are likely to default in coupon payments and principal amount.

.

Similar Solved Questions

1 answer
Tanner-UNF Corporation acquired as an investment $240 million of 8% bonds, dated July 1, on July...
Tanner-UNF Corporation acquired as an investment $240 million of 8% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The...
1 answer
21. The power cord used for charging your phone requires 22 W of power. If you...
21. The power cord used for charging your phone requires 22 W of power. If you are Europe, where the outlet voltage is 220 V, what would be the current required in the primary (in the outlet part of the power cord) a. 120 A b. 2200 A c. 22 A d. 10 A e. 0.1A 22. If you fill a plastic bottle halfway w...
1 answer
The Ksp of CuCl is 1.7×10−7. Find Ecell for the following cell. Cu(s)|CuCl(s)|Cl−(aq)(0.70M)||Cu+(aq)(0.10M)|Cu(s).
The Ksp of CuCl is 1.7×10−7. Find Ecell for the following cell. Cu(s)|CuCl(s)|Cl−(aq)(0.70M)||Cu+(aq)(0.10M)|Cu(s)....
1 answer
A rectangle has a perimeter of 12 m
A rectangle has a perimeter of 12 m. If each side is a whole number of meters, what are the possible dimensions for the length and width? List them and explain your answer....
2 answers
Question 15 When dragons on planet Pern lay eggs, the eggs are either green or yellow....
Question 15 When dragons on planet Pern lay eggs, the eggs are either green or yellow. The biologists have observed over the years that 39% of the eggs are yellow, and the rest green. Next spring the lead scientist has permission to randomly select 56 of the dragon eggs to incubate. Consider all the...
1 answer
Solve the given equation. (Enter your answers as a comma-separated list. Let k be any integer....
Solve the given equation. (Enter your answers as a comma-separated list. Let k be any integer. Round terms to three decimal places where appropriate. If there is no solution, enter NO SOLUTION.) 2 cos^2(θ) − sin(θ) = 1 θ = (List of numbers rounded to three decimal place) I ne...
1 answer
Honeycrisp Company is a leading producer of communication devices, including the walkie talkie. In the 3...
Honeycrisp Company is a leading producer of communication devices, including the walkie talkie. In the 3 months ended September 30, 2011, net sales of $4,100 million produced net earnings of $364 million. To calculate net earnings, Honeycrisp recorded $140 million in depreciation and amortization. O...
1 answer
Intel buys a manufacturing machine for $100,000 for use in making computer processors. The company also...
Intel buys a manufacturing machine for $100,000 for use in making computer processors. The company also paid 7% ($7,000) sales tax on the machine. It cost $3,000 to ship the machine to the manufacturing plant. Intel paid an additional $1,500 to have the machine installed and tested for initial use. ...
1 answer
2 147 a. Evaluate the triple integral (convert to oylindrical)12I, J xz dz dx dy b. Find the mome...
2 147 a. Evaluate the triple integral (convert to oylindrical)12I, J xz dz dx dy b. Find the moment of inertia about the z-axis for the solid in the first octant bounded by x2+y2 -4 and z2-x2 + y2 if the density is given by: z. (Use cylindrical.) c. Find the mass of the solid bounded by z2 -x2 +y2 a...
1 answer
Protein kinases are a class of enzymes that oftendunction in cancerous cells. Drugs can be used...
Protein kinases are a class of enzymes that oftendunction in cancerous cells. Drugs can be used to Impede the activity of these enzymes by binding to them and blocking their catalysis. Shown below is data describing the binding behavior of several drugs to a kinase enzyme EGFR. Use these data to res...
1 answer
Homework: Section 12.1 Homework Score: 0 of 1 pt | 2 of 4 (0 complete) RP...
Homework: Section 12.1 Homework Score: 0 of 1 pt | 2 of 4 (0 complete) RP HW Score: 0%, 0. 12.1.25 Given below are the number of successes and sample size for a simple random sample Question Help from a population. x-9, n-30, 9996 level a. Determine the sample proportion. b. Decide whether using the...
1 answer
Part A Review Researchers have tracked the head and body movements of several flying insects, including...
Part A Review Researchers have tracked the head and body movements of several flying insects, including blowflies, hover flies, and honeybees. They attach lightweight, flexible wires to a small metal coil on the insect's head, and another on its thorax, and then allow it to fly in a stationary m...
1 answer
Dwight Donovan, the president of Campbell Enterprises, Is considering two Investment opportunitles. Because of limited resources,...
Dwight Donovan, the president of Campbell Enterprises, Is considering two Investment opportunitles. Because of limited resources, he will be able to Invest in only one of them. Project A Is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of fi...
1 answer
Exercise 8-14 (Part Level Submission) Suppose the following information was taken from the 2017 financial statements...
Exercise 8-14 (Part Level Submission) Suppose the following information was taken from the 2017 financial statements of FedEx Corporation, a major global transportation/delivery company. 17 (in millions) Accounts receivable (gross) Accounts receivable (net) Allowance for doubtful accounts Sales reve...
1 answer
Communicating and reporting a client's response to Nursing interventions The Nursing Care Plan states that a...
Communicating and reporting a client's response to Nursing interventions The Nursing Care Plan states that a particular client may mobilise with a four wheel frame and transfer with supervision by one Nurse. However, you observe that they have difficulty getting out of bed and are unsteady on th...
1 answer
In your opinion, what are the benefits of having information systems integrated throughout the health industry...
In your opinion, what are the benefits of having information systems integrated throughout the health industry continuum of care, especially as it relates to long-term care. Your post should have a minimum of 150 words....
1 answer
1). Is there harm to raising children with a Gender Neutral Stance? 2). Is it ethical...
1). Is there harm to raising children with a Gender Neutral Stance? 2). Is it ethical to choose the gender of a baby using reproductive technology? 3) What current information can be offered to new parents of the child born with ambiguous genitals related to choosing a gender?...
1 answer
Maya has a piece of ribbon. She cuts the ribbon into 4 equal parts. Each part is then cut into 3 smaller equal parts. If the length of each small part is 35 cm, how long is the piece of ribbon?
Maya has a piece of ribbon. She cuts the ribbon into 4 equal parts. Each part is then cut into 3 smaller equal parts. If the length of each small part is 35 cm, how long is the piece of ribbon?...