Statements is true of flotation costs

Assignment Help Financial Management
Reference no: EM131933800

1. Jordan bought a? 4% semi−annual coupon bond with 25 years to maturity at par value of? $1,000. If the required rate of return? (yield to maturity? )of this bond increases to? 4.25%, by how much does the value of the bond? change?

A. minus? $38.04

B. minus? $38.27

C. plus? $39.28

D. The value does not change if Jordan intends to hold the bond to maturity.

2. Which of the following statements is true of flotation costs?

A. Flotation costs decrease the cost of preferred stock to the issuing firm.

B. Flotation costs are added to the issue price of preferred stock to compute the cost of preferred stock.

C. Floatation costs are added to the cost of debt to compute the weighted average cost of capital of a firm.

D. Floatation costs increase the rate the issuing firm must earn to pay the preferred dividend.

Reference no: EM131933800

Questions Cloud

What is her dollar profit based on the bond current price : What is the current price of the bond? What is her dollar profit based on the bond’s current price?
Return on common equity based on dividend valuation model : Compute Ke (required rate of return on common equity based on the dividend valuation model)
Stock option call premium due to benefits of diversification : Call premium for option on two stock portfolio will be higher than either of individual stock option call premiums due to benefits of diversification.
Everything else equal-asset value is directly related : Everything else equal, an asset's value is directly related to. The prices of puts and calls on the same stock move independently of one another.
Statements is true of flotation costs : Which of the following statements is true of flotation costs? by how much does the value of the bond? change?
Statement is correct concerning dollar cost averaging? plans : Which one of the following statements is correct concerning dollar cost averaging? plans?
How much do they still owe on their mortgage : The Jones family has to relocate to Atlanta and must sell their nice house in the suburbs. How much do they still owe on their mortgage?
Describe reasons for investing in mutual? funds : Which of the following accurately describe reasons for investing in mutual? funds? Technical analysis is used for which of the following? purposes?
Explain what type of inventory control system : Explain what type of inventory control system would not find the EOQ of much use?

Reviews

Write a Review

Financial Management Questions & Answers

  Determine amount debited to accounts receivable

Determine the following: (a) amount of the sale, (b) amount debited to Accounts Receivable,

  The returns in each scenario for the market portfolio

Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A,

  You are temporarily bearish on the stock market

If you are temporarily bearish on the stock market, how many contracts should you sell to fully eliminate your exposure over the next six months?

  Concept of planning assist christian health administrators

Concept of planning can assist Christian health administrators handle the complexities of health care finance.

  Beta of the stock-expected return on market

A share of stock sells for $51 today. The beta of the stock is 1, and the expected return on the market is 10 percent. The stock is expected to pay a dividend of $1 in one year. If the risk-free rate is 4.5 percent, what will the share price be in on..

  Nuclear decommissioning fund

Utilities which operate nuclear power plants are required to place funds into a "Nuclear Decommissioning Fund"

  Determine the payback period for project

Financial Appraisals Inc. is considering purchasing new software. Determine the payback period (in years) for this project. Software initial cost is $56,000 and would yield after-tax cash flows of $14,000 the first year, $16,000 the second year, $19,..

  The firm in terms of cash flow from operating activities

Describe the overall cash flow through the firm in terms of cash flow from operating activities, cash flow from investment activities, and cash flow from financing activities. Describe the general format of the statement of cash flows. How are cash i..

  Real rate of interest excludes everything except inflation

The “real” rate of interest excludes everything except inflation. Default risk is the chance or probability of financial loss from a venture investment.

  Evaluate the august 165 puts and calls

Evaluate the August 165 puts and calls, and recommend a conversion or a reverse conversion. Determine the profit from the transaction if the options are held to expiration.

  What is the component cost of debt

To help finance a major expansion, Castro Chemical Company sold a no callable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semi-annually, sells at a price of $875, and has a par value of $1,000. ..

  About the principles of finance

Assume that you went to Las Vegas and hit the jackpot for 5 million. Further assume that you were offered a choice to receive the $5 million today or receive it in two years. According to one of the principles of finance, which would you take?

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