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Seaside Builders’ bonds have a maturity of 10 years with a $1,000 face value, a 7% semiannual coupon, are callable in 5 years at $1,020, and currently sell at a price of $950. a) What is the yield to maturity (YTM)? b) What is the yield to call (YTC)? c) What is the current yield (CY)? d) What is the capital gains yield (CGY)? e)Are the bonds selling at a premium or discount? f) What would happen to the price of these bonds next year if market interest rates stay the same? g) What would happen to the price of these bonds next year if market interest rates increase? h) What would happen to the coupon rate of these bonds next year if market interest rates increase? i) A 10-year T-bond has a YTM of 2.52%. Why do investors require a premium (higher rate of return) on Seaside Builders’ bonds? j) How much is the premium? $222 if the face value is $1000.
From the first e-Activity, discuss four (4) governmental expenditures that you believe will have a significant impact on your local economy over the next year. Justify your response with examples.
The stock price changes according to a geometric Brownian Motion process, with time measured in months and coefficients µ=0 s=2. Calculate the probability that:
Compute the market betas for assets X and Y. - Compute the correlations of assets X and Y with M. - Is the correlation indicative of which of these two portfolios ended up riskier?
Project L costs $35,000, its expected cash inflows are $12,000 per year for 11 years, and its WACC is 9%. What is the project's payback?
Which one of the following will decrease the net present value of a project? Which one of the following transactions occurs in the primary market? Which one of the following statements concerning net working capital is correct?
The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta b = 1.15, the market return rM = 10%, and t..
To hedge a long position in a put option you need to:
Calculating Returns (CFA1) Looking back at Problem 12, suppose the call money rate is 5 percent and your broker charges you a spread of 1.25 percent over this rate. You hold the stock for six month and sell at a price of $65 per share. What is your e..
Worthington, Inc. is planning to issue $7,500,000 in 120-day maturity notes carrying a rate of 11% per year. Worthington’s commercial paper will be placed at a cost of $35,000. What is the effective cost of credit to Worthington?
You are compiling a 10-year price history of a company using the wall street journal on microfilm, and you know that stock splits are a purely accounting phenomenon that do not directly affect shareholder wealth. why do you still need stock split inf..
What is the amount of total liabilities and equity that appears on the firm's balance sheet? What is the company's total debt?
The MIT Whitehead Institute must choose between two cDNA microarray machines to expand their high-throughput genomic laboratory. Both of these machines have the same function, and the firm will only choose on vendor from which to purchase their machi..
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