After convertable bond is exchanged of equity

Assignment Help Financial Management
Reference no: EM13885199

All else equal a firm should see its return on assets ______________ after a convertable bond is exchanged of equity.

a. increase

b. decrease.

c. remain unchanged

d. it could increase or decrease

Reference no: EM13885199

Questions Cloud

Need to deposit annually now to meet your retirement goal : You are celebrating your 35th birthday today and you want to start saving for your retirement at age 65. You want to be able to withdraw $15000 per year on each birthday for 12 years following your retirement; the first withdrawal will be on your 66t..
Non-dividend paying stock is trading : Suppose that a non-dividend paying stock is trading at $80 and the risk-free rate is 4.0% (continuous compounding). Consider two American call options with two-months to expiration – one with a strike price of $100 and another with a strike price of ..
What is the nominal annual pre-tax cost of debt : A company has outstanding long-term bonds with a face value of $1,000, a 10% coupon rate, 25 years remaining until maturity, and a current market value of $1,214.82. If it pays interest semiannually, then what is the nominal annual pre-tax cost of de..
What is the present value of per year : What is the present value of $300.00 per year, at a discount rate of 12%, if the first payment is received 4 years from now and the last payment is received 25 years from now?
After convertable bond is exchanged of equity : All else equal a firm should see its return on assets ______________ after a convertable bond is exchanged of equity.
Opened an investment account : The day Little Joey was born his smart Grand Parents opened an Investment Account that promised to pay 8% per year with a lump sum of $10,000. In addition, they had been investing $100 per month in the same account. Today Joey turned 18 and his Grand..
Arrearages are unpaid preferred dividends : A convertible bond gives the bondholder the right to exchange the bonds for a preset number od shares of stock. a warrant is a security that often sold with bonds but that can be detached (bought and sold separately) from the bond. most preferred sto..
Suppose the international parity conditions hold : Suppose the international parity conditions hold. Does that mean that the nominal interest rates would be equal among countries? Why or why not?
Statements about warrants and convertibles : Which of the following statements about warrants and convertibles is FALSE?

Reviews

Write a Review

Financial Management Questions & Answers

  Interest earned on the sinking fund in the third year

Copernicus borrows $L and repays the principal by making ten annual payments at the end of the year into a sinking fund which earns an annual effective rate of 8%. The interest earned on the sinking fund in the third year is $85.57. Determine L.

  Considering the purchase of an outstanding kramerko bond

It is now march 1, 2001 and you are considering the purchase of an outstanding Kramerko bond with a par value of $1000 that was issued March 1, 1999. the Kreamerko bond has a 9.5 percent annual coupon and a 30-year original maturity (it matures on Fe..

  Planning for retirement

Your mom is planning for retirement. She wants to receive a stream of 26 end of year annual payments in retirement that grow at a rate of 3% each year. She wants the beginning payment received 1 year after retiring to be $28,000. If interest rates ar..

  What is the market rate of return on this stock

The common stock of Eddie's Engines, Inc. sells for $28.41 a share. The stock is expected to pay $3.30 per share next year. Eddie's has established a pattern of increasing their dividends by 5.4 percent annually and expects to continue doing so. What..

  What are current assets

McConnell Corp. has a book value of equity of $13,205. Long-term debt is $8,200. Net working capital, other than cash, is $3,205. Fixed assets are $17,380. How much cash does the company have? If current liabilities are $1,630, what are current asset..

  What is the expected arithmetic return of a security

What is the expected arithmetic return of a security based on the following historical data?

  New project with high-coupon bond vs. low-coupon bond

When do you think the firm should consider financing a new project with high-coupon bond vs. low-coupon bond? The factors you could consider could include (but not limited to): external capital market conditions, central bank policies, and firm chara..

  What will be dividend payout ratio

Puckett follows a residual distribution policy with all distribution as dividends, what will be its dividend payout ratio?

  Cost of equity with and without flotation

avits & Sons' common stock currently trades at $25.00 a share. It is expected to pay an annual dividend of $2.75 a share at the end of the year (D1 = $2.75), and the constant growth rate is 6% a year. What is the company's cost of common equity if al..

  Describe the risk structure of the interest rates

Describe the risk structure of the interest rates. Describe the classical theory of interest rate determination Compare and contrast the expectations theory and the liquidity premium theory of the term structure of interest rates.

  Factors that affect the corporate cost of capital

The Board Chair is concerned about factors that affect the corporate cost of capital for any business: the level of interest rates, tax rates, capital structure policy, and capital investment policy. Does the tax rate, cost of debt, or cost of equity..

  What is the bond price if the yield to maturity rises to

A $1,000 face value bond of Acme Inc. pays an annual coupon and carries a coupon rate of 4.75%. It is a 30 year bond when issued and it has 11 years remaining to maturity. If it currently has a yield to maturity of 5.5%. What interest payments to bon..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd