User Account

All Pages

What would be a fair price for these bonds

Assignment Help Accounting Basics
Reference no: EM133028324

Question - XZY in South Africaorth decides to issue 15-year bonds with a face value of 10,000 Rand and semi-annual coupon payments. The effective annual rate or yield on other commercial and industrial bonds of similar risk is 6%. The company decides to offer 4% annual coupon in case of liquidity constraints that may arise.

a. What would be a fair price for these bonds? Show workings.

b. Imagine that 4 years after issue, the general level of interest rates in the South African economy has moved to such an extent that the value of the Woolworths Inc bond has shifted exactly 10,000 Rand. What would now be the new bond-equivalent yield (the one that will be advertised in the financial press as an annual rate and is sometimes called the Quoted Interest Rate)?

c. What would now be the new effective annual yield or rate (EAY or EAR)?

Reference no: EM133028324

Questions Cloud

Demonstrate internal consistency : 1) The split-half reliability method allows test questions to be ranked in importance from highest to lowest to demonstrate internal consistency.
Calculate the NPV of the lease : The Baillat Corporation is considering the acquisition of a machine that costs $89,000 if bought today. Calculate the NPV of the lease
Why conducting research is so important : Why conducting research is so important? How would you know that the research project is effective or impact the community?
Project presentation and paper on cybercrime : Project Presentation and Paper on Cybercrime - How to prevent cybercrime and Effects of cybercrime
What would be a fair price for these bonds : XZY in South Africaorth decides to issue 15-year bonds with a face value of 10,000. What would be a fair price for these bonds
Enhance the appearance of a document : Outline three of the formatting features have used when creating a document
Emphasis on evidence-based practice : Discuss strategies that could be utilized to promote an environment that places emphasis on evidence-based practice. Include references
What is the aftertax salvage value of the asset : Question - An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. What is the aftertax salvage value of the asset
Database implementation assessment : Database Implementation Assessment - Design solutions applying relational database techniques to complex problems and communicate these solutions

Reviews

Write a Review

Accounting Basics Questions & Answers

  What must laura do before she posts either payment

Can Laura pst the larger payment and just refund the smaller payment to Blue Cross? What must Laura do before she posts either payment?

  In order to meet demand throughout each month the company

pertunia company has budgeted sales for its only products as follows july august septembersales in units 110000 98000

  What is the expected bonus to be paid

Assuming that his rushing performance follows a normal distribution with a mean of 750 yards and a standard deviation of 320 yards, what is his expected bonus to be paid? [the answers are rounded so choose the closest answer to what you calculate]..

  Prepare statement of retained earnings for the year ended

alpine expeditions operates a mountain climbing school in colorado. some clients pay in advance for services others are

  Describe the major characteristics of these assets

Plant assets such as land, buildings, and equipment receive special accounting treatment. Describe the major characteristics of these assets that differentiate them from other types of assets.

  Sam has promised to make four payments to joe each

sam has promised to make four payments to joe. each paymentis in the amount of 1000. what is the present value of these

  What is the gross income limit for tax year

he gross income test for a dependent who is a qualifying relative mandates. What is the gross income limit for Tax Year 2020

  Discuss the manual processes and flat-file systems

Discuss the manual processes, flat-file systems, the database approach, the resources, events, agents (REA) model; and enterprise resource planning

  What is the name of the outside auditing firm

What is the name of the outside auditing firm for your company? How long after the company's year-end did the auditor's issue their opinion

  Identify the two methods and describe the circumstances

Identify the two methods and describe the circumstances (including examples of users of each method) under which each method would be used

  C of 10 years with an unguaranteed residual value of 35000

assume that on january 1 2014 yard waste corp. signs a 5-year noncancelable lease agreement to lease an

  Identify home depot long-term liabilities

Identify Home Depot's long-term liabilities and the amounts for those liabilities from Home Depot's balance sheet at January 31, 2012

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