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A $2,100 face value corporate bond with a 6.0 percent coupon (paid semiannually) has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 6.5 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 7.6 percent. What will be the change in the bond’s price in dollars and percentage terms? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))
Change in the bond’s price in dollars $
Change in the bond’s price in percentage %
Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $37, $312, and $94, respectively. If Baker undergoes a 2-for-1 stock split, what is the new divisor for the price-weighted index?
What similarities exist between experiences in the United States and Ireland during the 2007-2009 financial crises
A 10-year bond with a face value of $1000 is redeemable at par and earns interest at 8.8% convertible semiannually. If the yield rate is 7% convertible semiannually, find the book value immediately after the payment of the 11^{th} coupon.
Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 5% annual coupon. The second issue consisted of 20-year bonds with a 4% annual coupon with warrants attached. What is..
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The last dividend per share on Stock K was $1.25. The dividend next year (Year 1) is expected to be 4% higher. Then the dividend is expected to continue to grow at the rate of 4% per year forever. If the stock is priced today at $16.25 per share, wha..
Earth-moving equipment having a first cost of $82,000 is expected to have a life of 18 years. The salvage value at the time is expected to be $15,000. Calculate the depreciation charge and book value for years 2, 7, 12, and 18 using: The straight-lin..
The finance industry is in the midst of a transformative period of evolution, and financial economists have a huge agenda to tackle. Capital Marketing Theory and the Efficient Market Hypothesis are two common concepts used to describe the relationshi..
Explain the characteristics of a line of credit. What is it about these loans that make them by far the most popular type of short-term credit? When the economy is growing at a slow pace, it puts a damper on production and sales. This is due to the f..
An individual plans to buy a stock valued at $135 each and keep it for 5 years at which point the things he can sell it for $155. The stock pays an annual dividend of $3.5. What is equivalent annual interest rate being generated by this investment?
What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has a beta of .5, what are the portfolio weights? If a portfolio of the two assets has an expected return of 8 percent, what is it..
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