Determine at what price should the bonds sell

Reference no: EM131956759

Question: Company A has a beta of 0.70, while Company B's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return? (Hint: find the required return for each stock and then take the difference.)Ryngaert Inc. recently issued noncallable bonds that mature in 12 years. They have a par value of $1,000 and an annual coupon of 6.7%. If the current market interest rate is 9.0%, at what price should the bonds sell?

Reference no: EM131956759

Questions Cloud

Identify the ecological and human health issues : Identify the cause(s) of the environmental problem. Identify the ecological and human health issues associated with the environmental problem.

What would be the appropriate fair market value for property : Based upon the below data, what would be the appropriate fair market value for each property?

What is the amount of the last payment : A company borrows $5,000 at an interest rate of 10% per year and repays the loan over 6 years in the following set of payments each year starting.

Why do firms underprice shares : What are the advantages/disadvantages of the three ways of getting capital as compared to one-another: Debt, VC, IPO

Determine at what price should the bonds sell : Company A has a beta of 0.70, while Company B's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%.

What price should charged if units are expected to be sold : A company has $6.80 per unit in variable costs and $4.90 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.46.

Identify a major up-trend to the stock market : How would an investor, who is a technical analyst and uses the EMA Strategy, identify a major up-trend to the stock market?

Predict that the discounted price of oil will be higher : Company C has a drilling prospect Y near Cushing Oklahoma which it must drill now or never. Company D confidently estimates that drilling and completing.

Which company should have the higher stock price : If most investors expect the same cash flows from companies a and b but are more confident that a's cash flows will be closer to their expected value.

User Account

All Pages