Math
posted by Elain .
John invests $100,000 in a newly issued 3 year bond. The bond is issued at par on 1 Jan 2007.The coupon rate is 4%. Interest is paid on each 30 Jun and 31 Dec. On 1 Jan 2008, John finds that the stock market provides better return. Therefore, John sells the bond on 1 Jan 2008. Yieldtomaturity is 4.2% on 1 Jan 2008. All sale proceeds are invested in a stock at $190 per share. During 2008, a dividend of $2 per share is received by John. On 31 Dec 2008, John sells all stock at $195 per share.
a) What is the Yieldtomaturity on 1 Jan 2007 ? Briefly explain why.
b) What are the sale proceeds from disposing the bond on 1 Jan 2008 ?
c) What is the return from investment in the bond in 2007 ?
d) What is the dividend income received by John in 2008 ?
e) What is the return from investment in the share in 2008 ?
f) What is the geometric average return for the 2007 and 2008 investment period?

Math 
bobpursley
Elain, Ming, Wong: We don't do homework for you. If you show thinking or work, we will generally critique it.
Respond to this Question
Similar Questions

Finance
A fouryear TIPS bond promises a real annual coupon return of 4 percent and its face value is $1,000. While the annual inflation rate was approximately zero when the bond was first issued, the inflation rate suddenly accelerated to … 
Finance
2. You are now considering adding a corporate bond to your investment portfolio. The bond was issued last year to have 10 years to maturity (so it has 9 years remaining to maturity from today) The bond has an 8% coupon, and was sold … 
Finance
Heinz Corporation bonds carry a coupon of 8% and will mature in 5 years at $1,000. Newly issued 5year bonds with similar characteristics are yielding 4%. Calculate today's market price of the Heinz bond. Compute your answer, submit … 
Finance
Heinz Corporation bonds carry a coupon of 8% and will mature in 5 years at $1,000. Newly issued 5year bonds with similar characteristics are yielding 4%. Calculate today's market price of the Heinz bond. Compute your answer, submit … 
Finance
Assume that Pelon Inc. has issued a 10 year maturity bond with a yield of 8%. Its coupon rate is 5% and the coupons are paid semi annually. Its par value is the value of this bond at the issue date? 
finance
1. Yest Corporation's bonds have a 15year maturity, a 7% semiannual coupon, and a par value of $1,000. The market interest rate (r) is 6%, based on semiannual compounding. What is the bondâ€™s price? 
Finance
You are considering the purchase of an outstanding Nickel Corp bond that was issued at par on Oct. 2, 2007 with a 10year maturity. It is now Oct 2, 2013. The bond has an 8% coupon rate and has semiannual coupons. The price is now … 
finance
10 year bond of par value Rs.8,000 was issued, with annual coupon rate of 11.5% and required rate of return is 9% per annum. what is the value of bond? 
Herzing
On March 15, a 20year, $5000 par value bond series with annual interest of 9 percent was issued. Three thousand of these bonds were issued at a price of 98. Interest is paid semiannually. 
Fianance
A taxexempt bond was recently issued at an annual 8 percent coupon rate and matures 20 years from today. The par value of the bond is $1,000.