How is the value of a bond determined

Assignment Help Financial Management
Reference no: EM131333449

How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent?

Are there any instances in which companies should not pay dividends?How do dividends impact the value of a share of stock?

Reference no: EM131333449

Questions Cloud

About the annual percentage rate : You have budgeted $450 per/month to purchase an automobile. You can obtain a 4-year new car loan for 12% (Annual Percentage Rate, APR). Assuming that you must finance the entire purchase price, what is the most that you can spend on the new car and s..
What amount should a parent deposit in savings account : Here is a present value question.  Take note: this question is common in planning for college! To have $6,000 for a child's education in 10 years, what amount should a parent deposit in a savings account that earns 12 percent, compounded quarterly (h..
What would you expect to be the stock price in one year : A company has just paid a dividend of 2.32$. Its discount rate is 9.9%, and the expected perpetual growth rate is 5.3%. What would you expect to be the stock's price TODAY? A company has just paid a dividend of 3.35$. Its discount rate is 10%, and th..
What is the effective annual rate for each investment : What is the future value in three years of $1000 invested in an account with a stated annual interest of 8%? Compounded annually? Compounded semiannually? Compounded quarterly? Also, what is the Effective Annual Rate (EAR) for each investment?
How is the value of a bond determined : How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10 percent annual coupon if its required rate of return is 10 percent? Are there any instances in which companies should not pay dividends?How do divi..
About the current ratio and quick ratio : Current Ratio: What effect would the following actions have on a firm’s current ratio? Current Ratio and Quick Ratio:  In recent years, Dixie Co. has greatly increased its current ratio.  At the same time, the quick ratio has fallen.  What has happen..
Experiencing rapid growth-projected dividend : Janicek Corp. is experiencing rapid growth. Dividends are expected to grow at 26 percent per year during the next three years, 16 percent over the following year, and then 6 percent per year indefinitely. The required return on this stock is 15 perce..
Statistical interpretation of expected future spot rate : What is the statistical interpretation of the expected future spot rate? The cash manager of a U.S. company needs to buy 1,000,000 British pounds to pay a British supplier. A foreign currency broker quotes her a bid-ask rate of £.4865-.5116/US$. What..
Coupon bond with ten years to maturity : What is the Macaulay duration of a 5.6 percent coupon bond with ten years to maturity and a current price of $1,057.70? What is the modified duration?

Reviews

Write a Review

Financial Management Questions & Answers

  Research a major corporation and identify its SBUs

Research a major corporation and identify its SBUs. Do you feel that any of the SBUs that you have identified have negative implications for the corporation? If so, why? What would you do to correct this?

  What is the required rate of return on MNC stock

MNC Corporation has a beta of 1.86. The risk-free rate of interest is 3%, and the return on the stock market overall is expected to be 11%. What is the required rate of return on MNC stock?

  What are the incremental free cash flows in the second year

Cathy Foods will release new range of candies which contain antioxidants. New equipment to manufacture the candy will cost 2 million, which will be depreciated by straight line depreciation over four years. In addition, there will be 5 million spent ..

  What is the firms cost of equity capital

A firm has a market value of equity of $30,000. It borrows $7500 at a cost of 8%. If the firm’s assets have a cost of capital of 15%, what is the firm's cost of equity capital? Assume no taxes.

  General cash offering to raise the needed funds

The Elkmont Corporation needs to raise $52.8 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $44 per share and the company’s under..

  What is annualized return on investment

Suppose you buy stock at a price of $78 per share. Four months later, you sell it for $83. You also received a dividend of $.52 per share. What is your annualized return on this investment?

  What is the accounting break-even quantity

A project has the following estimated data: price = $59 per unit; variable costs = $31.86 per unit; fixed costs = $7,200; required return = 14 percent; initial investment = $11,000; life = three years. Ignore the effect of taxes. What is the accounti..

  Project should be chosen if the projects are independent

Consider two projects with the following cash flows: Project S is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 1500, 1200, 800 and 300 respectively. Project L is a 4 year project with initial (time ..

  Calculate the cost of forward contract and option

Assume the following: LC Exposure = 10,000; Spot Rate = $1.00/LC1.00; 1 Year Forward = $0.98/LC1.00; 1 Year Strike Price = $0.975; Premium = $0.005; and WACC = 8.0% p.a. Please calculate the cost of the forward contract and the option.

  Market value weights assets liability and equity cash

WACC The Patrick's Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its before-tax cost of debit is 13%, and it marginal tax rate is 40%. Assume that the firms long term debt sells at par value. Calculate Patrick's W..

  Break-even analysis ignores fixed costs because fixed costs

Operating leverage means financing a portion of a firm's earnings per share with debt. An increase in financial leverage will increase the absolute value of EPS, everything else equal. Break-even analysis ignores fixed costs because fixed costs do no..

  What is the cost of the lease

You agree to lease a car for 5 years by paying $300 per month. You are not required to pay any money up front or at the end of your agreement. Your opportunity cost of capital is 6% APR (Annual Percentage Rate). What is the cost of the lease (Present..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd