Perpetual bond-what is its yield to maturity

Perpetual bond-what is its yield to maturity

Assignment Help Financial Management

Reference no: EM131464429

1. A perpetual bond pays a coupon of $25 per year.

a. If in year 1 this bond sells for $200, what is its yield to maturity?

b. If interest rates move to 20% next year, what will this bond sell for?

Reference no: EM131464429

Questions Cloud

Express last? year average inventory in weeks of supply : EBI Solar uses a? high-tech process to turn silicon wafers into tiny solar panels. Express last? year's average inventory in weeks of supply.

What is the intrinsic value for this share of stock : what is the intrinsic value (fair price) for this share of stock?

Tactus tackles fund-raising : Craig Ciesla and Micah Yairi eventually turned to friends and family for funding. What are the risks with raising money from such individuals?

What is the probability that the stock price : What is the probability that the stock price will be greater than 60 in 1 year?

Perpetual bond-what is its yield to maturity : A perpetual bond pays a coupon of $25 per year. If in year 1 this bond sells for $200, what is its yield to maturity?

Are you in favor of increasing the minimum wage levels : Are you in favor of increasing the minimum wage levels? Why or why not?

Proposed change and make a recommendation to the firm : Evaluate this proposed change and make a recommendation to the firm

Which company grows faster for the next year : Which company grows faster for the next year?

What is the market rate of return if the stock : What is the market rate of return if the stock is currently selling for $42.10 a share?

Reviews

Write a Review

Required(*) Message

Financial Management Questions & Answers

What will this fixed amount be

Harry is 16 years away from retiring and starts saving $200 a month in an account paying 2% compounded semi annually. When he retires, he wishes to withdraw a fixed amount each month for 24 years. What will this fixed amount be?

What is the monthly installment to pay back the annuity loan

Many farming households in the developing world use traditional biomass, kerosene and liquefied petroleum gas (LPG) for cooking and lighting. What are the internal rate of return (IRR) and payback period of the biogas investment – considering the sav..

What position in futures contracts should it take

Suppose that the company changes its mind and decides to increase the beta of the portfolio from 1.2 to 1.5. What position in futures contracts should it take?

What ratios calculations show and how the business can use

Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers.

What must the liquidating dividend be

JJ Industries will pay a regular dividend of $1.20 per share for each of the next four years. what must the liquidating dividend be?

Nondiversifiable risk-which is measured by beta

Nondiversifiable risk, which is measured by beta, can be lowered by adding a greater variety of stocks to a portfolio. Diversifiable risk can be lowered by adding a greater variety of stocks to a portfolio.

Bonds have face value-what is their current yield

Health Foods bonds have 7 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield?

Expected to produce free cash flows

You are considering opening a new plant. The plant will cost $500 million upfront. After that, it is expected to produce free cash flows that will last forever. The cash flow is expected to start at $30 million in the first year and grow at a consta..

What is the value of lambco to wolfco

Wolfco management is currently considering a merger with Lambco. Both companies are in the same industry, and both companies’ shares sell at a ratio of price to free cash flow of 10. 3 Wolfco has 20 million shares outstanding, selling at a price of $..

Debt-equity ratio to measure leverage

Use the following data from a firm's pro forma financial statements to calculate the following ratios for the firm: Current ratio to measure liquidity; debt-equity ratio to measure leverage;

Bonds make semiannual payments

Ashes Divide Corporation has bonds on the market with 12 years to maturity, a YTM of 8.4 percent, and a current price of $1,296.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?

Result in initial aftertax cash savings

In Excel, Och Inc is considering a project that will result in initial aftertax cash savings of $3.5 million at the end of the first year, and these savings will grow at a rate of 4% per year indefinitely. The firm has a target debt equity ratio of ...

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!

Submit Assignment

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