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Bond Yields and Rates of Return
A 30-year, 10% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,100. The bond sells for $1,050. (Assume that the bond has just been issued.)
What is the bond's yield to maturity? Round your answer to two decimal places. %
What is the bond's current yield? Round your answer to two decimal places. %
What is the bond's capital gain or loss yield? Loss should be indicated with minus sign. Round your answer to two decimal places. %
What is the bond's yield to call? Round your answer to two decimal places. %
An investor buys a European put on a share for $1. The stock price is currently $21 and the strike price is $17. When does the investor make a profit?
Then calculate the debt ratio of a service-oriented company, such as Cognizant Technology Solutions. Based on what you learned about leverage in this chapter, what would account for the difference in their debt ratios?
A firm sells its $1,140,000 receivables to a factor for $1,071,600. The average collection period is 1 month. What is the effective annual rate on this arrangement?
Denali Inc. has the following cash flows and a 10% required rate of return: Year Cash Flow 0 - $4,400 (Year 1) 1,500 (Year 2) 2,400 (Year 3) 1,200 (Year 4) 2,600. What is the profitability index for this project?
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 9 percent, -12 percent, 21 percent, 31 percent, and 18 percent. Suppose the average inflation rate over this period was 3.4 percent and the average T-bil..
Your coin collection contains 52 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.3 perce..
Using annual, semiannual, and quarterly compounding periods for each of the following, (1) calculate the future value if $5000 is deposited initially and (2) determine the effective annual rate.
Suppose the CAPM is true and you observe the following: Beta(i)=2. In a regression of Er(i) on Er(m), the R squared= 0.8 and the idiosyncratic variance of asset (i) is 25%. What is the standard deviation of the return on the market portfolio?
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $74 each year and expects these to grow at a rate of 0.05 each year. The upfront project costs are $559 and Ford's weighted average cost of capital is 0.07. If the i..
A durable power of attorney for health care is always a direct substitue for a living will. A living will only covers a narrow range of situations. A living will must generally meet the requirements of a formally drafted state statue.
One year ago Clark Company issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065, and it now sells for $1,270. What is the bond's nominal yield to maturity?
According to the moderate view of capital costs and financial leverage, as the use of debt financing increases:
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