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D Corporation has three bonds outstanding. All three have a coupon rate of 7 percent and a $1000 par value. The first bond has one year left to maturity. The second bond has 4 years left to maturity. The last bond has 8 years left to maturity. Assume for simplicity that the market rate for all three bonds is now 4 percent. What is the value for the first bond with one year left to maturity? ___________ What is the value for the second bond with four years left to maturity? ______________ What is the value for the first bond with eight years left to maturity? ___________ Assuming the same stated interest rate, in an environment of increasing interest rates which bonds will decrease in value the most -- the one with a longer term (duration/maturity) or shorter term (duration/maturity)?
A stock has a correlation with the market of 0.49. The standard deviation of the market is 25%, and the standard deviation of the stock is 33%. What is the stock's beta?
A 25-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 8%. a. What is the bond’s yield to maturity if the bond is selling for $1,010? Enter annual yield to maturity as your answer. b. What is the b..
Merlo, Inc. maintains a debt-equity ratio of 0.25 and follows a residual dividend policy. The company has after-tax earnings of $3,800 for the year and needs $3,200 for new investments. What is the total amount Merlo will pay out in dividends this ye..
Suppose that a march call option to buy a share for $50 costs $2.50 and is held until march. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised?
Calculate "r" the required rate of return for each of the following. Assume beta is 1.3 for this and the next two problems, the risk-free rate is 6.5%, and market risk is 10.5%. Now assume the risk-free rate increases to 8% because inflation is expec..
A 6-year bond pays interest of $80 annually and sells for $950. What are its coupon rate, current yield, and yield to maturity?
An company buys a color printer that will cost $18,000 to buy, and last 5 years. It is assumed that it will require servicing costing $500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 12%?
Explain how financial ratio analysis of a firm’s projected cash flow budget could be efficiently used by its managers for financial planning. (b) Explain why creating budgets and other financial planning is an important part of business planning.
What size sample is needed to ensure that you can estimate the population mean salary of all quality managers with more than 20 years of experience.
Use the following data from a firm's pro forma (i.e., projected or forecasted) financial statements to calculate the following profitability ratios for the firm, assuming that all stocks are common stocks: (a) net profit margin; (b) return on total a..
Which one of the following is not form of dividends a) cash b) stock dividends
Given the following information, calculate the firm's WACC. rd=8%,D0=$2.00, Tax rate=40%, p0=$25, Growth=0%,flotation cost on common equity=15%.
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