User Account

All Pages

Bensington glass company entered into a loan agreement

Assignment Help Other Subject
Reference no: EM13957193

1. (Floating-rate loans) The Bensington Glass Company entered into a loan agreement with the firm's bank to finance the firm's working capital. The loan called for a floating rate that was 26 basis points (0.26 percent) over an index based on LIBOR. In addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.21 percent and a minimum of 1.76 percent. Calculate the rate of interest for weeks 2 through 10.

Week 1 is 1.96% LIBOR
Week 2 is 1.67% LIBOR

The rate of interest for week 2 is ___ % (Round to 2 decimal places.)

2. (Bond valuation) Calculate the value of a bond that matures in 13 years and has a $1,000 par value. The annual coupon interest rate is 15 percent and the market's required yield to maturity on a comparable-risk bond is 11%.

The value of the bond is $___. (Round to nearest cent)

3. (Bond valuation) A bond that matures in 13 years has a $1,000 par value. The annual coupon interest rate is 12% and the market's required yield to maturity on a comparable-risk bond is 14%. What would be the value of this if it paid interest annually? What would be the value of this if it paid interest semiannually?

4. (Bond valuation) Pybus Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of 9%. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get an AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 9.5%. However, Pybus is not sure whether the new bonds will receive an AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 10.5%. What will be the price of these bonds if they receive either an A or AA rating? (Round to the nearest cent.)

5. (Yield to maturity) The market price is $1,175 for a 16-year bond ($1,000 par value) that pays 9% annual interest, but makes interest payments on a semiannual basis (4.5 % semiannually). What is the bond's yield to maturity? (Round to 2 decimal places)

6. (Bond valuation) Doisneau 22 year bonds have an annual coupon interest of 12%, make interest payments on a semiannual basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 14%, are these premiums or discount bonds? What is the price of the bonds? (Round to nearest cent.)

7. (Bond valuation) Fingen's 15-year, $1,000 par value bonds pay 9% interest annually. The market price of the bonds is $1,130 and the market's required yield to maturity on a comparable-risk bond is 6%. (Round to 2 decimal places.)

a. Compute the bond's yield to maturity?
b. Determine the value of the bond to you, given your required rate of return.
c. Should you purchase the bond?

8. (Yield to maturity) Abner Corporation's bonds mature in 22 years and pay 13% interest annually. If you purchase the bonds for $1,150, what is your yield to maturity? (Round to 2 decimal places.)

9. (Bond valuation) The 8-year $1,000 par bonds of Vail Inc. pay 12% interest. The market's required yield to maturity on a comparable-risk bond is 16%. The current market price for the bond is $880. (Round to 2 decimal places.)

a. Determine the yield to maturity.
b. What is the value of the bonds to you given the yield to maturity on a comparable-risk bond?
c. Should you purchase the bond at current market price?

10. (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 11% interest annually and have 11 years until maturity. You can purchase the bond for $1,105. (Round to 2 decimal places.)

a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a comparable risk bond is 11%?

11. (Bond valuation relationships) The 18-year , $1,000 par value bonds of Waco Industries pay 12% interest annually. The market price of the bond is $935, and the market's required yield to maturity on a comparable-risk bond is 14%. (Round to 2 decimal places)

a. Compute the bond's yield to maturity.
b. What is the value of the bonds to you given the yield to maturity on a comparable-risk bond?
c. Should you purchase the bond at current market price?

12. (Inflation and Interest rates) What would you expect the nominal rate of interest to be if the real rate is 4.1% and the expected inflation rate is 7.5%? (Round to 2 decimal places)

Reference no: EM13957193

Questions Cloud

What are the principal uses of a statement of cash flows : What are the principal uses of a statement of cash flows from the perspective of investors and company managers?
What is the annual impact of outsourcing payroll : What is the annual impact of outsourcing payroll? Will the company save money or spend extra money if payroll is outsourced?
What tricks noted by your colleagues might you adopt : How are you doing with memorizing the 10 knowledge areas and 47 processes? What tricks are you using to memorize the processes by process group? What tricks noted by your colleagues might you adopt?
What momentum would an electron in the ground state need : Given a Nanowire with cross sectional dimensions of 10 nm x 10 nm, what momentum would an electron in the ground state need in order to possess the same energy as a stationary electron (zero momentum) in the n=1,2 state?
Bensington glass company entered into a loan agreement : The Bensington Glass Company entered into a loan agreement with the firm's bank to finance the firm's working capital. The loan called for a floating rate that was 26 basis points (0.26 percent) over an index based on LIBOR. In addition, the loan ..
Order to solve differential equations : In order to solve differential equations, it is helpful to classify them as belonging to one or more categories. In this entry we will consider three common classes of first order ordinary differential equations (ODEs): separable, exact and linear..
Discuss difference between internal and external consultants : Discuss the key differences between internal and external consultants. Discuss which role you think would be more challenging and why.
Define and provide one example of a cash inflow : Define and provide one example of a cash inflow and one example of a cash outflow for (a) Operating cash flows, (b) Investing cash flows, (c) Financing cash flows.
Provide the entries in the books of lisa ltd : Provide the journal entries to account for tax in accordance with AASB 112 - Provide the entries for the sale and leaseback in the books of Lisa Ltd as at 1 July 2015.

Reviews

Write a Review

Other Subject Questions & Answers

  Minimize prejudice and discrimination

Start to think about strategies that will help society on a personal, as well as on a systematic level, so that we can let go of or minimize prejudice and discrimination. What are some things we can do as human beings and society?

  Problems based on classical hypothesis testing

What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01?

  Assignment on crime control vs. due process

Assignment on Crime Control vs. Due Process

  Health care costs and quality of care

Hospital emergency departments continue to be used as a source of primary medical care by large numbers of the community’s medically underserved population. What are the implications of this practice for the patients, and on health care costs and qua..

  Monthly patient volume-fixed and variable costs

Jasmine Gonzales, Administrator Director, has been asked by the practice members to see if it is feasible to add more staff to support the practice. What is the monthly patient volume needed per month to cover fixed and variable costs?

  Double the voices by playing the same notes sung by a chorus

When instruments double the voices by playing the same notes sung by a chorus, the music is considered to have _____?

  Korean war and the vietnam war

Two of the proxy wars that are the most famous and significant are the Korean War and the Vietnam War (though neither was truly a "war," since war was never officially declared in either instance).

  Comprehensive compensation and benefits package

Describe the differences between direct and indirect compensation including examples of each. Explain the different choices an organization has in developing a comprehensive compensation and benefits package?

  Features of the browsers

Explaining your reasoning in how features of the browsers are similar to and different than your usual browser. With what features are you unfamiliar? Are there advantages or disadvantages to using this browser?

  Describe position in favor-against drug testing in school

Write down essay in which you describe your position on this issue. Ensure to refer to this article and to own experience and ideas.

  How will you apply the principles you have learned

Society will probably never be without crime. Crime affects everyone, either directly or indirectly. How will you apply the principles you have learned in this course in your professional career? Give specific examples

  Brain regions-hippocampus-amygdala-corpus callosum

Discuss the basic functions associated with any four of the following brain regions: hippocampus, amygdala, corpus callosum, cerebellum, and hypothalamus. Compare and contrast the learning theories of Ivan Pavlov and B. F. Skinner

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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