What should be the coupon rate

Assignment Help Finance Basics
Reference no: EM133118547

HYDRO ONE INC wishes to issue a new series of bonds on the market to finance a major expansion project. The maturity would be in 20 years and to establish a competitive coupon rate, we want to offer a yield of 20% higher than the yield of the last series of bonds issued. This last series has a nominal value of $ 1000 and a coupon rate of 6% (paid semi-annually). It was issued on January 5, 2015 with a maturity of 30 years, i.e. January 5, 2045. The bond sells as of today, February 15, 2022 at $1,086. What should be the coupon rate (paid semi-annually) of the new issue assuming that the bond will be available at its discounted date of issue, i.e. at the 98.5 index? Please submit all your calculations

Reference no: EM133118547

Questions Cloud

Find counterpart that wants to borrow : -Suppose you borrow RM10,000,000 in the interbank money market at a KLIBOR yield of 6% p.a for a term of 1 month.Should you buy or sell KLIBOR futures contract
What was the closing price for stock yesterday : You found the following stock quote for DRK Enterprises, Inc., at your favorite website. You also found that the stock paid an annual dividend of $.83, which re
What will the future value of this stream : If the investor can earn a 7.5% rate of interest, what will the future value of this stream of cash flows be at the end of 3 years
What is the after-tax cost of debt : Given the data below, what is the after-tax cost of debt for Topstone Industries if its debt consists of 10-year bonds rated AA and the tax rate is 50%? The Tre
What should be the coupon rate : HYDRO ONE INC wishes to issue a new series of bonds on the market to finance a major expansion project. The maturity would be in 20 years and to establish a com
Prepare journal entries for the transactions noted : Prepare journal entries for the transactions noted above - Recorded accrued interest for the Commerce Bank note and the improvement note
Diversify away the unsystematic risk : Explain how a shareholder can, without knowing the future, diversify away the unsystematic risk of your company's stock potentially suffering a return that unex
Calculate nav of a fund : 1. Calculate NAV of a fund: Commissions, broker and transaction fees $1,200,000
Can jack brother be considered jack and jill relative : Jack and Jill provide 100% support for Jack's brother who lives in Germany full-time. Can Jack's brother be considered Jack and Jill's qualifying relative

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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