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Coupon: 0%
Call Date: July 1, 2008
Call Price: $104.32
Maturity: July 1, 2015
A firm issues the convertible debt shown above. The price of stock in this company on July 1, 2008 is $28.20. What is the minimum conversion ration that would make a bondholder prefer to convert rather than accept the call price?
A. 41 shares per $1000 principal
B. 35 hares per $1000 principal
C. 37 hares per $1000 principal
D. 32 hares per $1000 principal
The spot term structure for T-Bills (proxy for the risk free rate) is as follows 30-Day T-Bill=7% per annum, 60-Day T-Bill=7.25% per annum, 90-Day T-Bill=7.5% per annum, 180-Day T-Bill=7.65% per annum and the 270-Day T-Bill=7.85% per annum all with c..
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Using the DCF method, calculate the cost of equity. Using the SML method, calculate the cost of equity. The answers in [A] and [B] are very different. Why?
If you plan on making 20 equal withdrawals at the beginning of each year from the account (with the first withdrawal made at the end of the 30th year-the first year of retirement), how much can you withdraw?
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Western Enterprises’ bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon rate is 9 percent. The bonds have a yield to maturity of 7 percent. What is the current market price of these..
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