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A bank purchased bonds for 102.5 million that has a par value of $100 million. The bonds have three years to maturity. The coupon rate is 12 percent.
a. Calculate the yield to maturity on these bonds.
b. Using your answer to part a, compute the duration of this bond.
You are planning to invest $2,500 today for three years at nominal interest rate of 9 percent with annual compounding. What would be the future value of your investment? Now assume that inflation is expected to be 3 percent per year over the same thr..
What strategies have you used?Explain the importance of reviewing your credit report. How often should this be done? What are the implications of opening and closing credit cards on one's credit card status and score?
For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT? The cost of retained earnings typically exceeds the cost of new common stock.
Lower risk free rates results in __________ Put Option prices and ______ Call Option Prices. Which statement regarding executive stock options is correct?
Johnson Electronics is considering extending trade credit to some customers previously considered poor risks. Sales would increase by $130,000 if credit is extended to these new customers. Compute the incremental income after taxes. What will Johnson..
The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0940. The variance of Willow is 0.1890, and the variance of Sky Diamond is 0.1210. What is the correlation coefficient between the returns of the two stocks?
Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semi-annual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what i..
If the a bond is quoted at a price of 109.385 on February 1, 2008 that pays a coupon of 8% and matures in 9 years, what is the premium to par?
Assume that Firms U and L are in the same risk class and that both have EBIT = $500,000. Firm U uses no debt financing, and its cost of equity is rsu = 14%. Firm L has $1 million of debt outstanding at a cost rd =8%.
A company currently pays a dividend of $2.25 per share (D0 = $2.25). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 6% thereafter.
Primrose Corp has $20 million of sales, $3 million of inventories, $3 million of receivables, and $2 million of payables. Its cost of goods sold is 65% of sales, and it finances working capital with bank loans at an 7% rate. Assume 365 days in year f..
Kinston sports supplies is considering an average risk project that will cost $300,000 at time zero and is expected to generate annual after tax cash inflows of 52,000 at the end of each of the next 10 years. What is kinston's capital structure wei..
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