Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
At t = 0, a 3-year, 7% coupon corporate bond with face value $1,000 is trading at a credit spread of 15%. The risk free rate is constant and equal to 4% for all maturities. The recovery rate on the corporate bond is 40% if a default occurs. At t = 0, the market believes that the probability of default in the first year, P1, is 20%, and the probability of default in the second year, P2, is 30%. Assume investors are risk neutral. a) At t = 0, what is the price of the bond? b) At t = 0, what is the market's belief about the default probability in the third year, P3? c) If you buy $10,000 present value worth of the bond at t = 0, and you will liquidate the position at t = 1, what is the expected total amount of money you will have at t = 1? (Note: you may answer this question using a long way or a very short way.) d) Suppose the same company also has a 3-year zero coupon bond outstanding with face value $500. The bond is junior to the previous bond, and the recovery rate is therefore 0%. What is the value of this junior bond at t = 0? (Hint: you need to use P1, P2, and P3.)
Broker - Stock Market 1. A dealer on the market who that sells and buys securities on behalf of the public investors. 2. And he is an agent of investors 3. He is t
Stock Market Index Definition of Stock Market Index An index is a numerical figure that measures relative change in variables between two type of durations. Examples
How are earnings calculated for the Pe ratio?
What are the financial intermediaries? Financial Intermediaries: a. Mutual funds b. Pension funds c. Life insurance companies d. Banks
1. The current interest rate is 6.83%. CanGo.com's stock has a beta of 2.0. Estimate the cost of equity. 2. CanGo.com has a bond with a semiannual coupon rate of 9% and 5 year m
Standard ratio analysis should be used to supplement the discussion of strength and weakness. The following ratios are most often used by practitioners: (a) Growth Rates: PEG R
Constant payout ratio 1. This is whereas the firm will pay a fixed dividend rate as like 40 percent of earnings. The DPS would consequently fluctuate as the earnings per share
What are the Types of orders (i) Spot Delivery: Spot delivery means delivery and payment on the same day as date of the contract or on the next day. (ii) Hand Delivery:
A bond that has $1000 face value and a contract interest rate of 11.4%. The bonds have a current value of $1124 and will mature in 10 years. The firms marginal tax rate is 34%. The
Joint Stock Companies - Types of Business Organisations Initiators contribute to the capital support of those companies via the purchase of shares of those companies. These co
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd