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A firm issues 5- year bonds with a coupon rate of 4.7%, paid semiannually. The credit spread for this firm's 5- year debt is 1.2%. New 5- year Treasury notes are being issued at par with a coupon rate of 5.1%. What should the price of the firm's outstanding 5- year bonds be if their face value is $1,000?
A) $745.82 B) $932.28 C) $12.00 D) $1305.19
Norma has one share of stock and one bond. The total value of the two securities is 1,466.4 dollars. The stock pays annual dividends. The next dividend is expected to be 5.37 dollars and paid in one year. In two years, the dividend is expected to be ..
If you expect to earn a 12 percent simple rate of return on this bond, how much did you pay for it?
During 2014, Gutter Company. Had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. The non-convertible preferred stock has a par value of $100 per share. Gutter did not declare or pay any dividends during ..
The company can obtain unlimited debt at an interest rate of 10%. The marginal tax rate is 35%. Find the after-tax cost of debt. Preferred stock carries a dividend of $14 and currently sells for $120. Flotation cost on preferred stock is 10 pounds pe..
Suppose inflation is expected to increase the cost of producing gold by 10% a year but the price of gold does not change because of large sales of stockpiled gold by foreign governments.
What is the standard deviation of the rate of return on this investment?
Geothermal corporation issued a press release before the stock market opened announcing that its earnings are below last year’s earnings. Explain how each of the following individual scenarios could be consistent with the semi-strong form of market e..
If the spot yield curve is flat, that is, the rate for all maturities are the same, does it mean that the Forward curve will also be flat? Explain the reason for your answer.
Using the appropriate table from the Chapter 12 Appendices, record the present-value factor at 10% for each year and compute the present-value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate?
Boehm corporation has had stabke earnings growth of 8% a year for thee past 10 years and in 2013 Boehm paid dividends of $2.6 millions on net income of $9.8 million. However, in 2014 earnings are expected to jump to $12.6 million, and Boehm plans to ..
Houston Tools has expected earnings before interest and taxes of $236, 800, The debt is selling at par value. What is the value of this firm?
Sea Masters Co. issued $1000 par value bonds with a 8 percent coupon. The bond pays interest semi-annually and has 20 years remaining to its maturity date. If the market demands 9.7 percent required rate on the bond, what is the price of the bond?
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