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Both bond A and bond B have 8.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while bond B has 18 years to maturity.
a) Assume if interest rates suddenly rise by 1.2 percent, what is the percentage change in price of bond A and bond B? (Round your answer to 2 decimal places. Negative answers should be indicated by a minus sign. Omit the "%" sign in your response.)
b) Assume if interest rates suddenly fall by 1.2 percent instead, what would the percentage change in price of bond A and bond B? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Elle Mae Industries has a cash balance of $55,000, accounts payable of $175,000; inventory of $215,000; accounts receivable of $275,000; notes payable of $215,000; and accrued wages and taxes of $45,000. How much net working capital does the firm nee..
Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 3.50 percent. For all securities, the inflation risk premium is 2.25 percent and the real interest rate is 3.00 percent. The security's liquidity ..
Bond J has a coupon rate of 5.1 percent. Bond S has a coupon rate of 15.1 percent. Both bonds have nine years to maturity, make semi annual payments, and have a YTM of 11.2 percent. If interest rates suddenly rise by 3 percent, what is the percentage..
You believe that investors in Home Depot have an 10% cost of equity. Analysts’ currently expect Home Depot to earn $6.30 per share in exactly one year. After one year you expect Home Depot to grow at its sustainable growth rate in perpetuity.
Further assume that today's required rate of return on these bonds is 5%. How much would these bonds sell for today?
Mittal Corp forecasts dividends of $1.50 one year from now, $2.20 two years from now, $2.60 three years from now, followed by growth in the dividend of 5% per year forever after that. The required return on the stock is 9%. Your estimate of Mittal's ..
Which of the following will cause a company’s Beta to be high?
As of February 2010, what is your assessment of the worth of Wal-Mart’s Stock? Utilize all of the methods discussed in the case to value the shares,
Pierre Imports is evaluating the proposed acquisition of new equipment at a cost of $90,000. In addition the equipment would require modifications at a cost of $10,000 plus shipping costs of $2,000. What is the cash outflow at Time 0?
Bon Temps’ financial statements show the following information: Average cost of funds 10.0 % EBIT $ 500,000 Total capital $1,250,000 EPS $2.00 Shares outstanding 150,000 Marginal tax rate 30.0% (1) Compute the company’s economic value added (EVA) (2)..
Suppose a stock had an initial price of $60 per share, paid a dividend of $0.60 per share during the year, and had an ending share price of $72. Compute the percentage total return.
Canadian Bacon Inc. financial statements are presented in the table below. Based on the information in the table, calculate the firm’s the operating profit margin.
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