Change in the bonds price in dollars and percentage terms

Assignment Help Financial Management
Reference no: EM131977632

A $2,000 face value corporate bond with a 5.30 percent coupon (paid semiannually) has 12 years left to maturity. It has had a credit rating of BB and a yield to maturity of 7.4 percent. The firm recently became more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 6.5 percent.

What will be the change in the bond’s price in dollars and percentage terms? (Round your answers to 3 decimal places. (e.g., 32.161))

Change in the bond’s price in dollars $________

Change in the bond’s price in percentage %_______

Reference no: EM131977632

Questions Cloud

Simple interest on its savings account balances : First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually.
What is the rate of return on this investment : Charlie invested $8,000 in a stock last year. Currently, this investment is worth $10,388.38. What is the rate of return on this investment?
Explain the terms of the options : Investor A owns 1,000 shares of XYZ stock. Investor A buys 10 call options on XYZ stock. Explain the terms of the options.
What is the clean price of bond : You purchase a bond with an invoice price of $1,075. What is the clean price of the bond?
Change in the bonds price in dollars and percentage terms : What will be the change in the bond’s price in dollars and percentage terms?
In the typical homeowners policy : In the typical homeowners policy, fire is a covered peril. Most likely, some cash will burn up in the fire if your house burns down.
Should extend to include heights irr for all three project : Use the same table to plot NPV for all three projects. Your discount rate should extend to include the heights IRR for all three projects.
Assume that the firm has no debt : Consider a firm as follows: Assume that the firm has no debt. Firm value is defined as collective value of debt and equity.
Treasurer wants to know money market yield on instrument : The treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought.

Reviews

Write a Review

Financial Management Questions & Answers

  What should be your need for life insurance

Using the DINK method, what should be your need for life insurance?

  Compute the price of each stock

What does the difference in risk premiums tell us about the dividends from each stock? - Use the Gordon growth model to compute the price of each stock. Why is one price higher than the other?

  Moral hazard arise in the interbank loan market

How does moral hazard arise in the interbank loan market?

  Grow an investment to a specific amount of money

Which of the following statements about calculating the number of years needed to grow an investment to a specific amount of money is true?

  Explain working capital requirements are estimated to remain

The old machinery was purchased for $1 million 3 yrs ago, and is being depreciated on a straight-line basis over its 5 year life. Its economic life as of today, however, is estimated to be 5 years. It can be sold for $300,000 today.

  What is the firm after tax cost of debt

What is the firm’s before-tax cost of debt, what is the firm’s after tax cost of debt, What is firm’s cost of common equity using CAPM approach,

  Calculate the degree of operating leverage first

New Balance produces swimming trunks. The average selling price of one of the company's swimming trunks is $88.66. The variable cost per unit is $18.21, and New Balance has average fixed costs per year of $7164. What is the resulting percentage chang..

  Yield to maturity of its noncallable bonds remains

General forge and foundry Company has two divisions: one is very risky, and the other has significantly less risk. the company uses its investors' overall required rate of return to evaluate projects. it is most likely that the firm will. A firm's WA..

  Recent graduate was hired to lead small public company

A recent graduate was hired to lead a small public company. In an effort to increase the stock price of the company he proposed increasing the dividends of the company. He explained “since the stock price is basically based off of present value of al..

  Present value of the dividends during the fast-growth period

Ceebros Builders is expanding very fast and is expected to grow at a rate of 25 percent for the next four years. The company recently paid a dividend of $3.60 but is not expected to pay any dividends for the next three years. In year 4 management exp..

  What is the expected growth rate of the dividends

The common stock of Polybius Inc. just paid an annual dividend of $ 0.83 . The dividend is expected to grow at a constant rate forever. The required rate of return for this stock is 12.5 percent. If the current price of the stock is $ 24.85 what is t..

  Specifically to assess existence of bubbles in market

How might the Gordon model be used to explain in Irish house prices over the last 25 years, and specifically to assess the existence of "bubbles" in the market?

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