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Use the Following Information to Answer the Question(s)below

question 33

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Use the following information to answer the question(s) below.
Suppose you purchase a 20-year treasury bond with a 6% annual coupon ten years ago at par.Today the bond's yield to maturity has risen to 8% (EAR) .
-If you sell this bond now,the internal rate of return you will earn on your investment will be closest to:


Definitions:

Du Pont Identity

A formula that breaks down Return on Equity (ROE) into three component parts: profit margin, asset turnover, and financial leverage, to analyze a company’s financial performance.

Profit Margin

A fiscal indicator calculating the proportion of income left once total costs are subtracted from revenues.

Equity Multiplier

A financial ratio indicating the proportion of a company's assets that are financed by stockholder's equity.

Long-Term Debt Ratio

A financial ratio that shows the proportion of a company's long-term debt relative to its total capital.

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