Share of stock and one bond-What is YTM of bond

Assignment Help Financial Management
Reference no: EM131056799

Norma has one share of stock and one bond. The total value of the two securities is 1,245.64 dollars. The stock pays annual dividends. The next dividend is expected to be 5.88 dollars and paid in one year. In two years, the dividend is expected to be 6.75 dollars and the stock is expected to be priced at 120.21 dollars. The stock has an expected return of 17.9 percent per year. The bond has a coupon rate of 11.06 percent and a face value of 1,000 dollars; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 13 years. What is the YTM of the bond? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Reference no: EM131056799

Questions Cloud

What enterprise value do you estimate for creed in five year : Southwest Ventures is considering an investment in an Austin, Texas–based startup firm called Creed and Company. Creed and Company is involved in organic gardening and has developed a complete line of organic products for sale to the public that rang..
An investment offers a total return : An investment offers a total return of 14 percent over the coming year. Bill Bernanke thinks the total real return on this investment will be only 7.6 percent. Required: What does Bill believe the inflation rate will be over the next year?
To calculate the number of years until maturity : To calculate the number of years until maturity, assume that it is currently May 2013. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld ?? May 24 103.5514 103.6396 +.3067 2.409 5.424 May 29 104.5004 104.6461 +.4341 ?? 6.183 May 39 ?? ?? +.5457 4.111 Require..
Create a preliminary business disaster operations plan : Create a preliminary business disaster operations plan that dictates how you will communicate with your employees, suspend or continue operations, and collaborate with civic emergency responders during a disaster.
Share of stock and one bond-What is YTM of bond : Norma has one share of stock and one bond. The total value of the two securities is 1,245.64 dollars. The stock pays annual dividends. The next dividend is expected to be 5.88 dollars and paid in one year. In two years, the dividend is expected to be..
Draw a hypothetical demand and supply diagram : Draw a hypothetical Demand and Supply diagram of the housing market in equilibrium. Explain what you understand by the term "market in equilibrium".
Free cash flows-what is the current value of operations : BNM Corporation is a consulting company specializing in R programming and advanced Excel applications. Analysts project the following free cash flows (FCFs) during the next 3 years:  What is the current value of operations for BNM? Suppose consultant..
What is stop word removal and stemming : Why are these processes necessary for better information retrieval?
Determine the p-value : The test statistic in a left-tailed test is z=2.37. Determine the P-value and decide whether, at the 1% significance level, the data provide sufficient evidence to reject the null hypothesis in favor of the alternative hypothesis.

Reviews

Write a Review

Financial Management Questions & Answers

  What is its price to book value

Avila Industries has $7.5 million in assets, no preferred stock, and total liabilities of $3 million. There are 3 million shares of common stock outstanding and the stock is selling for $5.25 per share. What is its price to book value?

  How political risk factor adversely affect the profitability

These components are not produced in other countries. Explain how political risk factors could adversely affect the profitability of Key West Co.

  Antitrust laws were essentially created to stop businesses

antitrust laws were essentially created to stop businesses that got too large from blocking competition and abusing

  Verify the accuracy of the company finance statement

Which of the following are agency costs? 1. Paying a dividend to each existing shareholders. 2. Purchasing new equipment which increases the value of each share of stock. 3. Hiring outside auditors to verify the accuracy of the company finance statem..

  Compute the firm''s market capitalization

Calculate the firm's market capitalization and then calculate the enterprise value. b) Use the CAPM formula to determine the firm's cost of equity

  The age distribution of students at a community college

The age distribution of students at a community college is given below:Age in Years Number of Students (f)

  Firm reduced its net working capital investment

The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed long-term debt of $5.9 million, and the 2015 balance sheet showed long-term debt of $6.1 million. Suppose you also know that the firm’s net capital spending for 2015 was $1,440,000, and ..

  Calculate the companys component cost of equity using CAPM

Despite group of companies is a rapidly growing chain of retail outlets offering brand name merchandise at discount price. A security analysts report issued by a national brokerage firm indicates that debt-yielding 10% compose 60% of the company’s ov..

  Explore the capital budgeting techniques

Explore the capital budgeting techniques covered in the unit, NPV, PI, IRR, and Payback. Compare and contrast each of the techniques with an emphasis on comparative strengths and weaknesses.

  How much in dividends did the firm pay to shareholders

In its most recent financial statements, Del-Castillo Inc. reported $45 million of net income and $930 million of retained earnings. The previous retained earnings were $917 million. How much in dividends did the firm pay to shareholders during the y..

  Contribution margin ratio

Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $178,800, how many dollars of revenue must the company generate in order to reach the break-even point?

  Solve the following problems and be able to discuss them

solve the following problems and be able to discuss them relative to the financial management of a company.thress

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!

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