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Is the cost of a "callable" bond to the buyer higher or lower than if it was not "Callable"? Why?
My response is: Callable bonds are a bit more complex from an investment standpoint. Unlike a regular bond that pays interest until expiration, a callable bond that can end at its original maturity date and the other at a callable date. The call price of a bond usually exceeds the face value to make it more enticing for investors to buy. There is a benefit to the issuer in the case of a decrease in interest rates. The issuer has the advantage to borrow money at a lower rate and then pay off the higher rated return on investments. This is not desirable to investors because of the redemption of bonds.
Risk and Beta - explain/describe (a) diversifiable risk and (b) market risk.
Coupon rate. mike corp has bonds on the market with 13.5 years to maturity, a YTM OF 7.3 PERCENT, , and a current price of $1,080 The bond make semi annual payments. What must the coupon rate be on these bonds. Please explain using a TI BA II PLUS
bond market conditions do affect decisions about when the firms issue debt or equity in primary markets?
Explain the implied repo rate on a U.S. Treasury bond futures spread position ? Identify two ways to express interest rate parity based on how interest rates are quoted.
Kelly Corporation will issue new common stock to finance an expansion. The existing common stock just paid a $0.95 dividend, and dividends are expected to grow at a constant rate of 3.35% indefinitely. The stock sells for $51, and flotation expenses ..
Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 10% annual coupon. The second issue consisted of 20-year bonds with a 7% annual coupon with warrants attached. Both b..
An company buys a color printer that will cost $18,000 to buy, and last 5 years. It is assumed that it will require servicing costing $500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 12%?
Company X intends to expand the company's operation by making significant investments in several opportunities available to the group. Accordingly, the group has identified a need for additional financing in preferred and new common stock and new bon..
What is the equilibrium date-0 price q of this new asset? - Show that when λ is small, the liquidity premium (q - 1) commanded by Treasury bonds is proportional to the probability of a high liquidity shock.
Based on the corporate valuation model, SG Telecom's total corporate value is $750 million. what is its price per share?
Warren borrowed $14,000 on a noninterest-bearing, simple discount, 4.5% 60 day note. Assume ordinary interest.
Which one of the following risks is irrelevant to a well-diversified investor? The risk-free rate of return is 3.9 percent and the market risk premium is 6.2 percent. What is the expected rate of return on a stock with a beta of 1.21?
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