Rank from lowest credit risk to highest credit risk

Assignment Help Financial Management

Reference no: EM132022041

1. Rank from lowest credit risk to highest credit risk the following bonds, with the same time to maturity, by their yield to maturity: Treasury bond with yield of 5.55 percent, IBM bond with yield of 7.95 percent, Trump Casino bond with a yield of 9.15 percent and Banc Ono bond with a yield of 6.12 percent

Trump Casino, IBM, Banc Ono, Treasury

Trump Casino, Banc Ono, IBM, Treasury

Treasury, Banc Ono, IBM, Trump Casino

Treasury, Trump Casino, Banc Ono, IBM

2. Consider these debt strategies being considered by a corporate borrower. Each is intended to provide $1,000,000 in financing for a three-year period. The current one-year rate is 5%. Which strategy (strategies) will eliminate credit risk? Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%. Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset annually. The current LIBOR rate is 3.50% Strategy #3: Borrow $1,000,000 for one year at a fixed rate, and then renew the credit annually.

a. Strategy #1

b. Strategies #1 and #2

c. Strategy #3

d. Strategy #2

Reference no: EM132022041

Questions Cloud

What is the project net present value : The cost of capital is 7 percent. What is the project’s net present value if the tax rate is 22 percent?

The company capital structure consists of debt : What percentage of the company's capital structure consists of debt?

What is the comprehensive income : What is the comprehensive income?

What are some industries that may be impacted : What are some industries that may be impacted by each other even though there is no obvious connection?

Rank from lowest credit risk to highest credit risk : Rank from lowest credit risk to highest credit risk the following bonds, with the same time to maturity, by their yield to maturity:

The variability of firm operating cash flows : The variability of a firm's operating cash flows is probably reduced by international diversification of its production-sourcing

Probably reduced by international diversification : The variability of a firm's operating cash flows is probably reduced by international diversification of its production, sourcing,

What is modified internal rate of return : What is the modified internal rate of return (MIRR) of this project given the following cash flows?

What is the firm horizon or continuing-value : Holt Enterprises recently paid a dividend, D0, of $3.25. What is the firm's horizon, or continuing, value? What is the firm's intrinsic value today, P0?

User Account

All Pages