Bonds market price assuming investors

Assignment Help Accounting Basics
Reference no: EM13143900

Alpha Inc has a $1,000 par value bond that was issued ten years ago for a thirty year term. Interest rates were very high at that time and the bond's coupon rate is 22%. The relevant bond market interest rate is now 10%. All of Alpha's bonds have a call feature. It allows the company to pay off the bond anytime after the first fifteen years, but requires that bondholders be compensated with an extra year's interest at the coupon rate if such a payoff is exercised. What is the bond's market price assuming investors expect it will be called as soon as possible.

Reference no: EM13143900

Questions Cloud

Income statement prepared for business enterprise : Use by customers to determine a company"s ability to provide needed goods and services. 21. Which of the following would represent the least likely use of an income statement prepared for a business enterprise?
How many genotypes are possible : a hypothetical human trait is controlled by a single gene locus. four alleles have been identified:a,b,c,d. alleles a,b,c, are all codominant; allele dis recessive to all other alleles. how many phenotypes are possible? how many genotypes are poss..
Find reading that separates bottom from the other : A quality control analyst wants to examine thermometers that give readings in the bottom 4%. Find the reading that separates the bottom 4% from the others.
How many kilograms of water were in the sample : A 55.0-{ g} piece of ice at 0.0 C is added to a sample of water at 8.0 C. All of the ice melts and the temperature of the water decreases to 0.0 C.
Bonds market price assuming investors : It allows the company to pay off the bond anytime after the first fifteen years, but requires that bondholders be compensated with an extra year's interest at the coupon rate if such a payoff is exercised. What is the bond's market price assuming ..
Where are ionic bonds most likely to be found : In a living organism, where are ionic bonds most likely to be found.
Compute the partial pressure of hydrogen gas : Calculate the partial pressure of hydrogen gas at equilibrium. and calculate the vaue of Kp for this reaction.
Find probability five selected homes have security system : Assume there are 18 homes in the Quail Creek area and 8 of them have a security system. Five homes are selected at random: What is the probability all five of the selected homes have a security system?
Calculate the built-in gains tax : A cash basis calendar year C corporation in Athens, Georgia, had $100,000 of accounts receivable on the date of its conversion to an S corporation on February 14. By the end of the year, $60,000 of these receivables had been collected. Calculate a..

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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