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Consider a $1,000 par value 2-year bond issued January 1, 2014 maturing January 1, 2016 with a coupon rate of 9% paid semiannually and $1,000 redemption value. The yield rate is 6% convertible semiannually.
(1) Find the prices of the bond.
(2) Construct the amortization table of the bond.
(3) Find the market price of the bond on March 12, 2015.
(4) Find the purchase price of the bond on October 5, 2015.
Tin-Tin Waste Management, Inc., is growing rapidly. Dividends are expected to grow at rates of 30 percent, 35 percent, 25 percent, and 18 percent over the next four years. Thereafter, management expects dividends to grow at a constant rate of 7 perce..
A convertible bond has a 7.40 percent, semi-annual coupon and a conversation rate of $31.25. The bond has a face value of $1,000 and matures in 11.5 years. Assume that you buy this bond today and sell or convert it to stock one year from now when the..
An electronics firm invested $60,000 in a precision inspection device. It cost $4000 to operate and maintain in the first year and $3000 in each of the subsequent years. At the end of 4 years, the firm changed their inspection procedure, eliminating ..
What is the Macaulay duration of a 7% coupon bond with five years to maturity and a current price of $1,025.30? What is the modified duration? (Assume semi-annual coupon payments unless it is explicitly stated to use annual coupon payments)
The Targaryen Corporation (TTC) commits to paying a constant dividend of $3 per share each year, in perpetuity. Suppose that another investment with the same level of systematic risk as TTC’s shares has an expected return of 15%. Now assume that all ..
Volbeat Corporation has bonds on the market with 16 years to maturity, a YTM of 10.5 percent, and a current price of $943. The bonds make semi-annual payments. What must the coupon rate be on the bonds?
Describe the firms economic environment and evaluate how this has impacted historic firm performance and is likely relevant to future performance and Identify the key success factors and risks of the firm's strategy and the sustainability of profi..
What are the ways a firm can obtain short-term financing? Explain.
Stock XYZ: earning at time 0 E0 = $2.50, b = 40%, ROE = 13%, risk-free rate is 3%, expected return on market portfolio is 9%, the beta of stock XYZ is 1.5, and CAPM is valid. (1) What’s the required rate of return k based on CAPM? (2) What’s D1 of st..
Provide a rationale to support your determination. In other words, you must show your work and explain how you arrived at the probability.
A 35-year maturity financial security is expected to have a cash flow of $230 one year form today. The cash flow is expected to grow at a constant rate of 12% per year for its life. The required rate of return on asset is 14%. What is the maximum pri..
ABC Corporation has issued callable bonds that have 8% annual coupon rate paid semianmally. Bonds could be redeemed starting from the end of year 2. The call premium equals the amount of the annual coupon. The bonds mature in 8 years, have a face val..
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