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a) Blackmores needs to borrow money for the purpose of purchasing a long -term asset. Given the fact that the cost of borrowing is usually cheaper in the money market than the bond market, please advise the company where it should raise the required fund, in the money market or the bond market and why? (In your answer, distinguish between the two debt markets and discuss the potential risk of choosing the inappropriate market to raise the funds)
b) Blackmores decides to issue a bond with a Face Value of $1,000. The coupon rate of the bond is 12% p.a. and the coupons are paid semi-annually. The bond has a term to maturity of 5 years and the yield-to-maturity is 8% p.a. What is the implied price of this bond?
c) Assume that the market interest rate decreases by 0.5%. Without calculation, predict and explain whether the price of the bond will increase or decrease.
d) If an investor bought the bond at the implied price calculated in part b) and held it for 1.5 years, and then sold it for $1100. What was his holding period yield p.a.?
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a. If the market's required yield is 1111 percent, what is the value of the stock for that investor? b. Should the investor acquire the stock?
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The controlling shareholder of Dragon Semicon based in Taiwan. Dragon Semicon has strong growth potential. In order to fund future growth, you are considering listing the company stock either on the New York or the London stock exchange. Visit the..
If we value Crowe Industries using the constant growth model, what implied return will investors receive at the current price?
Bobby borrowed $7,000 from his father to purchase a high-end bike. Bobby paid back $9,000 to his father at the end of 4 years.
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A corporation currently pays a dividend of $2 per share, D0=$2. It is estimated that the corporation's dividend will grow at a rate of 20 percent per year for the next 2 years,
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a portfolio manager summarizes the input from the macro and micro forecasters in the following tablemicro
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