User Account

All Pages

What was the price of this bond then

Assignment Help Financial Management
Reference no: EM131906421

Features of Bo-knows Enterprises Bond and Stock

Amount of debt issue                  $100 million                         Security                                    None

Date of issue                                      6/1/90                                      Sinking Fund       Annual, beginning 6/1/2000

Maturity                                              6/1/20                                      Call Provision     callable after 6/1/2015

Face Value                                          $1000                                       Call Price               102%

Annual Coupon                               9 %                                              Rating                      Moody’s Aa

Offer price                                          100%                                        Junior Note                           

a. At the time of its IPO, If the company were to issue a similar bond but without a sinking fund, should the coupon rate be the same or lower or higher? Briefly explain.

b. In March 2011, the yield of similar risk bonds was 7%, what was the price of this bond then?

c. In 2012, the yield on bonds of similar risk bonds decreased to 6%, what was the price of this bond then?

d. Suppose you purchased this bond in 2011 and sold it in 2012. Did you make a good investment? What is your return?

Reference no: EM131906421

Questions Cloud

Makes only the annual interest payments : John borrows 130,000 for 30 years and makes only the annual interest payments to the lender.
What is the estimated ocf for this project : Consider a project to supply Detroit with 20,000 tons of machine screws annually for automobile production. What is the estimated OCF for this project?
Minimum acceptable rate of return : What is the maximum price you would pay for a bond if your Minimum Acceptable Rate of Return (MARR) is 7%,
Current assets management involves the management of cash : Current assets management involves the management of cash, marketable securities, accounts receivable and inventory.
What was the price of this bond then : In March 2011, the yield of similar risk bonds was 7%, what was the price of this bond then?
How the consumer price index is constructed : How the consumer price index (CPI) is constructed and why it is an imperfect measurement of the cost of living.
State sexual behavior or problem you would like to change : Your topic sentence must clearly state the sexual behavior or problem you would like to change in yourself or an area you would like to address.
Discuss the impact on foreign trade environment : Discuss the impact on foreign trade environment and globalisation (exchange rates, duties , BOP etc.) in the age of Trump and Brexit.
Calculate the value of and the ph : Calculate the value of [H+] and the pH for this solution. For propionic acid, Ka = 1.3 × 10-5.

Reviews

Write a Review

Financial Management Questions & Answers

  Treasury bill is issue through competitive bidding process

Treasury Bills are issued through competitive bidding process at discount from par. Three ratios of liquidity are net working capital, current ratio and acid.

  Ignoring the effect of taxes-find the financial break-even

Consider a project with the following data: accounting break-even quantity = 10,300 units; cash break-even quantity = 9,500 units; life = six years; fixed costs = $190,000; variable costs = $88 per unit; required return = 10 percent. Ignoring the eff..

  Taxable income-income tax liability for current tax year

Good Luck Corporation, a calendar–year, accrual-basis Corporation, has $500,000 of gross receipts and $320,000 of expenses from its service business. What is Good Luck Corporation’s taxable income and income tax liability for the current tax year? Wh..

  Currently widespread movement

There is currently a widespread movement in the US to pressure employers (especially fast-food restaurants like McDonalds) to pay a living wage.

  A project has an annual operating cash flow

A project has an annual operating cash flow of $45,000. Initially, this four-year project required $3,800 in net working capital, which is recoverable when the project ends. The firm also spent $21,500 on equipment to start the project. This equipmen..

  What is the probability that the call is exercised

What is the value of d2 and the value of d1? What is the probability that the call is exercised? What is the discounted expected value of the sale price assuming the call is exercised optimally? What is the discounted expected value of the purchase p..

  Estimate the annual cash flows for the brewpub project

Estimate the annual cash flows for the brewpub project. Use the "best case scenario". To do this, calculate the annual revenues and annual expenses for the 10 year project,any changes in the net working capital, and any changes to capital expenditure..

  How much total capital gain or loss

Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of $11 per share per year for the last 17 years. The current required r..

  Management of cash cycles and working capital management

When it comes to the management of cash cycles and working capital management in general a company may afopt different strategies depending upon the current cash flow and outflow, as well as their preferences and needs related to cash. What is the di..

  Determine the fair present value of the bond

BSW Corporation has a bond issue outstanding with an annual coupon rate of 5.8 percent paid quarterly and four years remaining until maturity. The par value of the bond is $1,000. Determine the fair present value of the bond if market conditions just..

  How much will you pay for policy

If the required return on this investment is 5.3 percent, how much will you pay for the policy?

  What is the premium or discount on the fund

A closed-end fund has total assets of $495 million and liabilities of $280,000. Currently, 28 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $18.45, what is the premium or discount on the fund?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd