User Account

All Pages

Bond valuation

Assignment Help Financial Management
Reference no: EM131009906

(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.)

Reference no: EM131009906

Questions Cloud

How many futures contracts would cover your risk : Suppose you are the treasurer of a large U.S. multinational firm that wants to hedge the foreign exchange risk associated with a payable of 1,000,000 Australian dollars due in 90 days. How many futures contracts would cover your risk? Assume that eac..
Development and testing of the new app will take four months : Take Five Systems, a new start-up, is developing a new iPhone application (“app”) and provides you with the following assumptions: Development and testing of the new app will take four months. Month five is the first month of revenue generation. Init..
What are the pros and cons of the alternative terms : You are developing a business plan for a new wholesale specialty goods retailer. You collect data on typical industry working capital terms. Using the alternative terms, compute the cash cycle and estimate the investment in working capital the busine..
Bond valuation : (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, ..
The growth rate in dividend is expected : A common stock has just paid a dividend of $1.64/share. The dividend is expected to grow by 16% for the coming 25 years. After that, the growth rate in dividend is expected to be 5% per year in perpituity. The RRR on the stock is 10%. What is the val..
Compute the prospective rate of return : A project has a first cost of $120,000 and an estimated salvage value after 25 years of $20,000. Estimated average annual receipts are $25,900; estimated average annual disbursement are $15,060. Assuming that annual receipts and disbursements will be..
What is the present worth equivalent cost to the contractor : A grader costs $350,000 to purchase and is expected to have a useful life of 8 years. Annual operating and maintenance costs are estimated to be $35,000 per year, and the salvage value after 8 years of use is estimated to be $50,000. At an interest r..
The risky portfolio and the risk-free asset : A portfolio has an expected rate of return of 14% and a standard deviation of 22%. The risk-free rate is 4%. An investor has the following utility function:. U = E(r)-1/2(A)σ2 Which value of A makes this investor indifferent between the risky portfol..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate option payoff and profit for each these spot value

Rixon Corporation purchases CHF call options with a strike price of USD 0.90. The option premium is USD 0.04 per currency unit. A financial analyst at Rixon forecasts the following possible values for spot CHFUSD at maturity. Calculate option payoff ..

  What is the new degree of operating leverage

At an output level of 62,000 units, you calculate that the degree of operating leverage is 3.70. Suppose fixed costs are $280,000. What is the operating cash flow at 56,000 units? What is the new degree of operating leverage?

  About the non annual compounding

It is now January 1. You plan to make a total of 5 deposits of $600 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 10% but uses semi annual compounding. You plan to leave the money in the b..

  What is the return on assets

The After Life has sales of $428,300, total assets of $389,100, and a profit margin of 7.2 percent. What is the return on assets?

  Outstanding after the stock repurchase is completed

A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,400 and other assets of $3,500. Equity is worth $4,900. The firm has 700 shares of stock outstanding and net income of $1,450. The firm has decided to spend ..

  Compute mr and mrs boazs alternative minimum taxable incomeo

Mr. and Mrs. Boaz file a joint return on which they claim their four children (all over age 14) and Mr. Boaz's mother as dependents. Their AGI is $134,300, and they have the following itemized deductions:On the basis of these facts, compute Mr. and M..

  Develop a balanced scorecard

Develop a BSC that is aligned to the key goal in the strategic plan, i.e. exceeding revenue of $25 million dollars by 2015.

  Which leverage ratio is better

Eccles Company has beta 1.7, debt/assets ratio 20%, and tax rate 34%. The cost of debt for Eccles is 9%, and of equity 15%. The riskless rate is 4%. Find the WACC of Eccles. If its debt/assets ratio is increased to 25% while its cost of debt remains ..

  Bond issuer will not be able to make timely payments

Which of the following terms is the chance that the bond issuer will not be able to make timely payments?

  What are the common stockholders residual claims to earnings

Wrecks Inc. has $20 million in earnings, pays $2.75 million in interest to bondholders, and $1.80 million in dividends to preferred stockholders. a. What are the common stockholders’ residual claims to earnings? b. What are the common stockholders’ l..

  Standard deviation of the portfolio return

Mr. Jones has a 2-stock portfolio with a total value of $400,000. $300,000 is invested in Stock A and the remainder is invested in Stock B. If standard deviation of Stock A is 12.65%, Stock B is 21.55%, and correlation between Stock A and Stock B is ..

  What was the original issue price

X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $12 per share. With the passage of time, yields have soared from the original 9 percent to 14 percent (yield is the same as required rate of return). What was the or..

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