Value subordinated debenture bonds with a coupon rate

Assignment Help Financial Management

Reference no: EM131053108

Bunkys burgers issues some new 1000 par value subordinated debenture bonds with a coupon rate of 12% payable semi annually. the bonds mature 30 yrs. the bond does not ontain a call feature or a converson feature. the market intrest rate on similar bonds at the time of issuance is 13% compounded semi annually. you buy a bond. ten years later the market interest rate on 20 yr bonds is 10% coumpounded semi annually. you sell your bond. Compute the annual rate of return you earned over the 10 yr period.

Change the assumptions of the problem and now suppose the bond is callable at 1065. it is also convertible into bunkys common stock at a conversion rate of 10 shares per bond. at the end of the 10 yr holding period bunkys common stock is selling for 125 per share. the firm calls the bond. compute annual rate of return you earned over 10 yr period. please show all work.

Reference no: EM131053108

Questions Cloud

Do you consider domestic violence a public health issue : Do you consider domestic violence a public health issue? Why? Why should law enforcement address domestic violence in their communities?

Action research project-planning stage : For this assignment, you will continue to develop your action research plan by identifying and analyzing baseline data to inform the need for your study.

Refer to the real world case on linkedln : Refer to the Real World Case on Linkedln, Umbria, Mattel, and Others in the chapter. What is your take on the debate as to whether these "influential" individuals do really have an effect on others, or they are representative of an underlying cult..

The purposes of health information technology : For decades now, health information technology has been transforming clinical and business practices in health care. While certain information systems, such as those for billing, are widespread, other valuable applications are taking longer to bec..

Value subordinated debenture bonds with a coupon rate : Bunkys burgers issues some new 1000 par value subordinated debenture bonds with a coupon rate of 12% payable semi annually. the bonds mature 30 yrs. the bond does not ontain a call feature or a converson feature. Compute the annual rate of return you..

The e-commerce success factors : Do the e-commerce success factors listed in Figure 9.11 guarantee success for an e-commerce business venture? Give a few examples of what else could go wrong and how you would confront such challenges.

Africans operating under assumption : In your experience do you believe that most people (or yourself personally) think of drums and drumming as the major defining aspect of African music? List or describe some examples of things that might contribute to non-Africans operating under ..

What is the total after-tax annual cost of a machine : What is the total after-tax annual cost of a machine with a first cost of $45,000 and operating and maintenance cost of $0.22 per unit produced? It will be sold for $4,500 at the end of five years. Production is 750 units per day; 250 days per year. ..

The day he retires to realize his retirement dream : Mark freeda wants to plan for retirement and needs your advice. in the first 5 years of his retirement he plans to travel and will need 450,000 each yr to do so. after that he will be able to live on 100,000 per yr. mark does not know how long he wil..

User Account

All Pages