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Your friend Marvin is excited because he believes he’s found an investment bar- gain. A broker at QuickCash Investments has offered him an opportunity to buy a bond issued by Galveston Galleries Inc. at a very attractive price. The 30-year bond was issued ten years ago at a face value of $1,000, paying a coupon rate of 8%. Interest rates have risen recently driving bond prices down, but most economists think they’ll fall again soon driving prices back up. That makes Marvin and his broker think this bond may be a real money maker if he buys now, holds for a year or two, and then sells. The bonds of companies that were similar to Galveston at the time its bond was issued are now yielding 12%. Galveston’s bond is selling at $300 which the broker claims is a fantastic bargain. Marvin knows you’re a finance major and has asked your opinion of the opportunity. How would you advise him?
please do in excel with calculation....
Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year (D1 =$3.00); its beta is 0.8; the risk-free rate is 5.2%; and the market risk premium is 6%. The dividend is expected to grow at some constant rate g, a..
HexChat, Inc. has issued 19 year bonds 5 years ago. The bonds pay semiannual coupons, with a coupon rate of 4.4 percent, and $1000 face value. If your required return on this investment is 7.7 percent APR, how much would you be willing to pay for thi..
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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments.
Calculate the bond equivalent yield and effective annual return on a jumbo CD that is 115 days from maturity and has a quoted nominal yield of 6.56 percent.
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According to the EOQ model, a very large increase in sales will result in a very large increase in inventory a decrease in inventory either a or b could be correct a large decrease in inventory little additional inventory.
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Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 40 percent. What is the company’s total book val..
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