Determine the approximate yield to maturity

Assignment Help Financial Management

Reference no: EM131605981

1. A bond with a par value of $1000 and a coupon interest of 9.75% p.a. is currently trading at $925. Calculate its current yield.

2. Determine the approximate yield to maturity of a $500 par value bond with a coupon rate of10% p.a. (paid semi-annually), a current market price of $375 and a term to maturity of 15 years.

3. To finance a new line of product, the COB Corporation has issued $500,000,000 worth of bonds with a par value of $10,000, a coupon rate of 9% p.a. (paid monthly), and a maturity of 10 years. compute the price of the bond if the opportunity cost is 15% p.a.

4. A firm's preferred stock pays an annual dividend of $75 per share. Its par value is $250. If your required return is 14% p.a., what is the most you should pay for security?

5. In response to the stock market's reaction to the dividend policy, the MFI Corporation has decided to increase its dividend payment at a rate of 6% per year. The firm's most recent dividend is $3.50 and the required rate of interest is 11% p.a. What is the maximum price you should be willing to pay for a share of stock?

6. FMD Inc., has a beta of 1.835 the annual risk-free rate of interest is currently 3%, and the required return on the market portfolio is 14%. The firm estimates that its future dividends (per share) will continue to increase at an annual compound rate consistent with that experienced over the 2013-2016 period: 2013 = $2.70, 2014 = $2.95, 2015 = $3.25, 2016 = $3.40. Estimate the value of the firm's stock assuming today is December 31, 2016.

Reference no: EM131605981

Questions Cloud

Remaining balance on the mortgage after five years : What is Alex's initial mortgage payment? What is the remaining balance on the mortgage after five years?

Each bond is convertible in to shares of common stock : each bond is convertible into 30 shares of common stock 6% convertible, cumulative preferred stock, $100 par value;

Save to reach her retirement goal : How many years would she have to save to reach her retirement goal of $1.5 million? Assume, for ease of calculation, that all years are 365 days long.

Lock-in with your forward hedge strategy : what ringgit amount can you lock-in with your forward hedge strategy?

Determine the approximate yield to maturity : Determine the approximate yield to maturity of a $500 par value bond with a coupon rate of10%.

What would be your realized yield to maturity : What would be your realized yield to maturity if you sold the bond after 8 years?

Key element in strategic planning : Which of the following is NOT a key element in strategic planning as it is described in the text?

National bank should offer to provide effective annual rate : What is the corresponding nominal rate compounded monthly that Second National Bank should offer to provide the same effective annual rate?

Describe how each affects the risk of project or firm : Identify financial contracts that can be used to hedge risk and describe how each affects the risk of a project or firm.

User Account

All Pages