What is the new price of the bond-primula corporation

Assignment Help Finance Basics
Reference no: EM132825951

Primula Corporation decides to issue a 30-year corporate bond. The bond carries a coupon of 6%, which represents the underlying 30-Year Treasury Note yield of 4% plus a 2% credit spread. If the yield-to-maturity (YTM) of the bond at issuance is also 6%, what is the price of the bond? A year later, the 30-Year Treasury still yields 4%, but the Primula credit spread has widened to 3%. What is the new price of the bond? If you decided to buy $10,000 worth of Primula bonds at a yield of 8%, what is the NPV of that purchase?

Reference no: EM132825951

Questions Cloud

Explain the relevance and applicability of the research : Explain the relevance and applicability of the research to Social Work. Describe the role of the Social Work profession in studying social problems.
Write essay describing job think will be important in future : Write an essay describing a job you think will be important in the future. Tell what skills or knowledge the workers will need for this occupation.
Dividend growth rate implied by the constant : The last dividend paid was $1.32 a share. If the required return on the stock is 14%, what is the dividend growth rate implied by the constant growth model?
What cartoon is saying about persuasive communication : What cartoon is saying about persuasive communication? Have you ever experienced this type of persuasion? Provide an example from your own life.
What is the new price of the bond-primula corporation : What is the new price of the bond? If you decided to buy $10,000 worth of Primula bonds at a yield of 8%, what is the NPV of that purchase?
Explain the adaptive value of rough-and-tumble play : Explain the adaptive value of rough-and-tumble play and dominance hierarchies. Cite examples of how language awareness fosters school-age children's language.
What is the new price of the bond : What is the new price of the bond? If you decided to buy $10,000 worth of Primula bonds at a yield of 8%, what is the NPV of that purchase?
How does expertise affect information processing : How does expertise affect information processing? Why is expertise necessary for, but not the same as, creativity? What student and college-environment.
What price will a finance company pay for a conditional : What price will a finance company pay for a conditional sale contract requiring 18 monthly payments of $185.50, if the company requires a rate of return of 20%

Reviews

Write a Review

Finance Basics Questions & Answers

  What is earning after taxes

Sherlock Homes, a manufacturer of low-cost mobile housing, has $4,900,000 in assets.

  Arguments for a government guarantee of bank deposits

1. What are the arguments for a government guarantee of bank deposits? 2. What is a "credit crunch" and what are the signs of its emergence?

  Crypton electronics has a capital structure consisting of

crypton electronics has a capital structure consisting of 41 common stock and 59 debt. a debt issue of 1000 par value

  What are legal-political issues in international marketing

What are legal and political issues in International Marketing such as risk, regulation, intellectual property protection, stability, and government control?

  An investment returning

Marcy placed $3800 a year into an investment returning 5 percent a year for her daughter's college education. She started when her daughter was 2. How much did she accumulate by her daughters 18th birthday?

  The general price level

Suppose that transaction costs are zero, there are no barriers to trade and that Chinese products are identical to British items, would you expect the Yuan to appreciate,

  Compute lindstrom diluted earnings per share

All of Lindstrom's bonds are convertible and, if converted, would increase the number of share of the firm's stock outstanding by 15%. Lindstrom is subject to a total effective tax rate of 40% and has a TIE of 10. Compute Lindstrom's diluted earni..

  What is benchmarking

What is benchmarking, and how do you do it? How would you as a healthcare manager utilize this measurement tool?

  Write down the formula for the value of the firm

Write down the formula for the value of the firm (V) at t=0 in terms of g and z. For z=0.195, calculate V for these cases: z=0.05, 0.125, 0.18, 0.19

  Using financial calculator to solve financial problems

Suppose your younger sister will start college in 5-years. She has just informed your parents that she wishes to go to Harvard University, which will cost $18,000 every year for four years

  Which of the amounts should be reported

A new accountant at Marin Inc. is trying to identify which of the amounts shown below should be reported as the current asset "Cash and cash equivalents".

  Rates of returns on similar-risk investments

What is the least you will sell your claim for if you can earn the following rates of returns on similar-risk investments during the 10-year period?

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