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a ) what are the yield to maturity and the yield to call of a 20 year, 8% bond that is selling for $1150 has a call value of $1100 in year 6? Which will the investor make? b) We buy a 15 year, 10% bond yielding 9%. We sell it after 4 years when market rates are 12%. What is the realized compound yield during the 4 years, if YTM decreases, as soon as we buy it, and it remains at 6% for the 4 year duration?
Bond value. The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 20 years. Compute the current price of the bonds if the present yield to maturity is:
Cy bought a share of stock for $47.50 that paid a dividend of $.72 and sold one year later for $51.38. What was Cy's dollar profit or loss and holding period return?
Sharon Frances Oliver estimates that she needs 10,000 per year to retire in 25 years. She expects to get 4% in her investment account. She expects to need the cash flows for 20 years until she dies. How much will she need to invest per year to reach ..
A group of friends decides to go on a trip next summer in July 2017. To have the money required for the trip, each of them will need to invest $200 every month starting next month and additional $50 every month after the next month. Each of them rece..
Suppose you own 3,000 common shares of Laurence Incorporated. The EPS is $8.00, the DPS is $4.25, and the stock sells for $90 per share. Laurence announces a 2-for-1 split. Immediately after the split, how many shares will you have? What will the adj..
The current price of a stock is $15. In 6 months, the price will be either $19 or $11. The annual risk-free rate is 3%. Find the price of a call option on the stock that has an strike price of $12 and that expires in 6 months. (Hint: Use daily compou..
Sharpe Knife Company expects sales next year to be $1,710,000 if the economy is strong, $905,000 if the economy is steady, and $710,000 if the economy is weak. Mr. Sharpe believes there is a 40 percent probability the economy will be strong, a 35 per..
Summerdahl Resorts' common stock is currently trading at $32.00 per share. The stock is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75), and the dividend is expected to grow at a constant rate of 6% a year. What is the..
Based on the information below, calculate the weighted average cost of capital -Two thousand shares of preferred are outstanding, each of which pays an annual dividend of $7.50. They originally sold to yield 15% of their $50 face value. They''re no..
Do you think the one-year forward rate would underestimate, overestimate, or be an unbiased estimate of the future spot rate in one year? Explain.
Investor buys a stock today assuming to resell it one year from now for $70. Dividend expected to be paid in one year is $10. If required rate of return is 25%, how much the investor is ready to pay for the stock today? That is, what is the PV of fut..
How to calculate the average inventory holding
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