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You own a bond portfolio worth ?$250,218. You estimate that your portfolio has an average? yield-to-maturity of 3.7?% and Macaulay Duration of 14.4 years. If interest rates went down one percentage point and your? portfolio's yield-to-maturity changed by the same? amount, what would be the new value of your bond? portfolio? ?
Step? 1: Compute DV01 as the? portfolio's MacD divided by 1 plus the? portfolio's YTM, multiplied by the value of the portfolio and divided by 100.
Step? 2: Compute the change in the? portfolio's value based on its starting value given in the question and the estimated change in value from Step? 1).
The new portfolio value would be $ ___________ (Round to a whole? number.)
Twice Shy Industries has a debt−equity ratio of 1.3. Its WACC is 7.1 percent, and its cost of debt is 6.6 percent. The corporate tax rate is 35 percent. What would the cost of equity be if the debt−equity ratio were 1.0?
If the firm's risk increases, causing the required return to rise to10%, what will be the common stocks value?
Three years ago, the Morgan Co. issued 15-year, 6.5 percent semiannual coupon bonds at par. Today, the bonds are quoted at 100.6. What is this firm's pretax cost of debt?
If the property is sold at the end of 5 years, compute the rate of return on the after-tax cash flow in actual dollars.
Why should we (managers) learn calculations involving the time value of money? What kind of management decisions does it help us make?
Assuming a 5-basis point change in yield-to-maturity, what is the bond’s approximate modified duration?
Nike produces swimming trunks. The average selling price of one of the company's swimming trunks is $63.02. The variable cost per unit is $27.29, and Nike has average fixed costs per year of $9301. Assume that the current level of sales is 368 units...
On January 1, an insurance company has 100,000 which is due to Linden as a life insurance death benefit.
The Black Bird Company plans an expansion. The expansion is to be financed by selling $52 million in new debt and $124 million in new common stock. The before-tax required rate of return on debt is 10.73% percent and the required rate of return on eq..
RWE Enterprises: Expansion Project Analysis RWE Enterprises, Inc. (RWE) is a small manufacturing firm located in the hills just outside of Nashville, TN. The firm is engaged in the manufacture and sale of feed supplements used by cattle raisers. Calc..
Seven in ten students attending publicly funded universities leave the state after graduation, indicating that a very large fraction of states' investments in human capital bears fruit elsewhere.- Why might states still play such a large role in h..
A $500,000 loan requires monthly payments for 20 years. The annual interest rate on the loan is 3%. Immediately after the loan has been finalized, the price of loans of equivalent risk and maturity increases by 50 basis points (3.0% to 3.5%). How muc..
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