Investors are applying to renegotiated cash flows

Assignment Help Financial Management

Reference no: EM131575610

On January 1, 2017, you purchased a 10-year bond issued by Alpha Inc. at par. The bond features an 8% coupon ($40 every six months) and a par value of $1,000. Within minutes of purchasing the bond, Alpha announced financial problems, and the terms of the bond were renegotiated overnight. Going forward, Alpha will only pay a 6% coupon ($30 every six months) and $800 at maturity. The YTM rose to 24.43% on January 2, 2017.

What is the true discount rate (nominal annual rate with semi-annual compounding) investors are applying to the renegotiated cash flows?

Reference no: EM131575610

Questions Cloud

Find the terminal stock price using benchmark pe ratio : find the “terminal” stock price using a benchmark PE ratio. What is the target stock price in five years? What is the stock price today?

What is dividend growth rate : The company just paid an annual dividend of $1.04 per share. What is the dividend growth rate?

Calculate the combined value of the proposed acquisition : Calculate the combined value of the proposed acquisition. Calculate the proposed acquisition premium.

Calculate after-tax rate cash flows and net present value : Calculate the after-tax rate cash flows and the net present value of the cash outflows under each alternative.

Investors are applying to renegotiated cash flows : What is the true discount rate (nominal annual rate with semi-annual compounding) investors are applying to the renegotiated cash flows?

Betas tend to revert toward zero over time : When using historical data, there is always the possibility of estimation error. Evidence suggests that betas tend to revert toward zero over time.

Mutual fund manager at atlas asset management : John Galt is a mutual fund manager at Atlas Asset Management.

Determine flitcrofts net income for the year : Given the following bits of information saved from the inferno, determine Flitcroft’s net income for the year.

What is the expected return of the stock after transaction : If the risk of the debt does not? change, what is the expected return of the stock after this? transaction?

User Account

All Pages