Investment

Step 1: Determine the present value of the bond’s face value. FV= 5000 x 1.05 = 5250 N=43 I/Y=6.8 PV=? P/Y = C/Y = 2 FV= 5000 x 1.05 = 5250 N=43 I/Y=6.8 PV=? PV equals $1246.74 Calculate the present value of the interest payments in step two. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ N=43 I/Y=6.8 FV = 0 PV=? […]

More investors are looking for methods to gain exposure to the Chinese currency as the Chinese economy becomes a more dominant force in international trade and the yuan continues to gain popularity. While the yuan is currently tied to the dollar and not completely free to trade, it is rapidly approaching that status and becoming

Except for zero-coupon bonds, most bonds pay monthly interest or “coupon” payments. Zeros, as they’re known, are bonds that don’t have a coupon or interest payment. If interest rates rise, Instead of receiving interest payments, you purchase a zero bond at a discount to its face value and are paid the face amount when it

A coupon is a monthly interest payment received by a bondholder from the moment the bond is issued until it matures. Bondholders receive no interest from zero coupon bonds, commonly known as discount bonds. Instead, you get a significant reduction on the bond’s face value. The bondholder receives the face value of his investment at

Bonds with a zero coupon pay no interest for the duration of the bond’s existence. Rather, investors purchase zero coupon bonds at a significant discount to their face value, which is the amount the investor would receive when the bond “matures,” or matures. Zero coupon bonds typically have long maturities, with many lasting ten, fifteen,

The 100 trillion Zimbabwean dollar banknote (1014 dollars) is equivalent to 1027 dollars prior to 2006. Are Zim bonds legitimate? Zimbabwean Bonds are a type of legal tender close money issued by the Reserve Bank of Zimbabwe to address the country’s currency shortage. Bonds are backed by the country’s reserve currency and are pegged to

The interest paid on debt less any income tax savings owing to deductible interest expenditures is the after-tax cost of debt. Subtract a company’s effective tax rate from one and multiply the difference by its cost of debt to obtain the after-tax cost of debt. Instead of using the company’s marginal tax rate, the effective

Calculate your tax rate’s reciprocal (1 – your tax rate). If you pay 25% tax, your reciprocal is (1 -.25) =.75, or 75%. To calculate the TEY, divide this sum by the yield on the tax-free bond. For example, if the bond’s yield is 3%, use (3.0 /.75) = 4%. How can you figure out

Look for the bond’s purchase price in your financial records. To translate a percentage interest rate, divide the coupon rate in dollars by the bond’s purchase price and multiply by 100. What is the formula for calculating the annual stated interest rate? Multiplying each year’s new balance by the interest rate is one technique. For

C* (1-(1+r)-n/r) + F/(1+r)n = Bond Price What factors go towards determining bond years? To finish the calculation, an investor must divide the present value of each cash flow by the total present value of all the bond’s cash flows, then multiply the result by the number of years until maturity. What is the interest