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Bond valuation
You are considering a 10-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 11.52%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.
During recent years your company has made considerable use of debt ?nancing, to the extent that it is generally agreed that the percent debt in the ?rm's capital structure is too high.
Gabbys garage issued a bond with a 10-year maturity, a $1,000 par value, a 10 percent coupon rate, and semi-annual interest payments. Two years after the bond was issued, the going rate of interest on similar-risk bonds fell to 6 percent. Suppose the..
The investment of $400 can be depreciated to zero book value over 10 years. EBITDA in year 1 is equal to $100, and from there on is expected to grow at 5% per year, every year, forever. Compute the NPV of the project if the tax rate is 0% per year. ..
Income statement preparation On December 31, 2015, Cathy Chen, a self-employed certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees, a bo..
Stock rights provide the stockholder with a. cumulative voting privileges b. the opportunity to receive extraordinary earnings c. the right to elect the board of directors d. certain purchase privileges of additional stock shares in direct proportion..
What is the present value of the following uneven cash flow stream −$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually. 2. Suppose that on January 1 you deposit $100 in an account that p..
_____ are the reserves the Fed requires the bank to hold.
ExxonMobil (XOM) is one of the half- dozen major oil companies in the world. The firm has four primary operating divisions (upstream, downstream, chemical, and global services) as well as a number of operating companies that it has acquired over the ..
If the company decided to take on a large, representing over 40% of their existing capital, project outside of their industry, how would this impact the company’s cost of capital?
Assume two securities are negatively correlated. If these two securities are combined into an equally weighted portfolio, the portfolio standard deviation must be:
Savings institutions are exposed to credit risk as a result of their heavy concentration in mortgages, mortgage-backed securities, and other securities.
Calculate the expected Return of Stock A, expected Return of Stock B, standard Deviation of Stock A and standard Deviation of Stock B
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