Compare the ytm and the call rate

Assignment Help Financial Management

Reference no: EM131942832

1. A noncallable Treasury bond has a quoted yield of 4.98 percent. It has a 5.95 percent coupon and 9 years to maturity.

2. We have a preferred stock which pays $ 6 per year. When we buy it, the cops is 6%. we keep it for 12 years and then sell it. At that time, cops drops to 2%. What is the pric we sell it at? If the stock is called after 3 years at 110%, if the cops is 1%, what is the price?

3. A bond sells for $500 and it pays $100 per annum till its maturity 28 years from now The firm, however, may call it back after 3 years at $1300. Derive its ytm and its call rate. Compare the ytm and the call rate. Are they reasonable? Why, or why not? Which the two does an investor make?

Reference no: EM131942832

Questions Cloud

Compare additional profits with increase in bad debt expense : In order to do so, you will have to compare additional profits with increase in bad debt expense and financing costs of additional receivables.

Company calculates the cost of capital of project : A multi national company calculates the cost of capital of a project in country x.

First compute the cost of capital of the company : The tax rate debt and equity are 40% 20 million and 10 million respectively. First compute the cost of capital of the company?

Construct capital budget-project on basis of npv and mirr : Construct the capital budget. Evaluate the project on the basis of NPV and MIRR.

Compare the ytm and the call rate : Derive its ytm and its call rate. Compare the ytm and the call rate. Are they reasonable? Why, or why not? Which the two does an investor make?

Cost of capital resulting in different hurdle rates : Currently, in the capital budgeting arena, each GCS division has its own method of calculating the cost of capital resulting in different hurdle rates;

What is the least you could pay to acquire bond : A Treasury issue is quoted at 102.40465 bid and 102.495 ask. Assume a face value of $1,000. What is the least you could pay to acquire a bond?

Company weighted average cost of capital and cost of equity : What is the company’s weighted average cost of capital? What is the company’s cost of equity? What is the company’s cost of debt?

What is the critical marginal tax rate : A taxable issue yields 5.9 percent, and a similar municipal issue yields 4.4 percent. What is the critical marginal tax rate?

User Account

All Pages