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ABC is also interested in buying some corporate bonds for its investment account. Suppose these bonds have identical coupon rates of 7.75% but one issue matures in 3 years, one in 8 years, and the third in 13 years. Assume that a coupon payment was made yesterday and they are all issued by the same company.
a) The yield to maturity for all three is 6.55%, what is the fair price of each bond?
b) Suppose that the yield to maturity for all of these bonds changed instantaneously to 5%. What is the fair price of each bond now?
c) Suppose that the yield to maturity for all of these bonds changed instantaneously again, this time to 9%. Now what is the fair price of each bond?
d) Based on the fair prices at the various yields to maturity is interest-rate risk the same, higher, or lower for longer- versus shorter-maturity bonds.
What does the financial analysis process reveal and what is the goal of common-size analysis
De'Andre purchased one of XXXL Shirt Company's bonds last year when the market interest rate on similar-risk bonds was 6 percent. When he purchased the bond, it had 7 years remaining until maturity.
The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $108,000, and it would cost another $12,500 to modify it for special use by your firm.
On December 31, Beth Klemkosky bought a yacht for $110,000 and paid $14,000 down and agreed to pay the balalnce in 9 equal annual installments that include both the principal and 8 percent interest on the declining balance.
The hospital is facing pressure from public-interest groups to control the prices it charges to the uninsured. Assume that the hospital is able through various efficiencies to cut its per-visit cost by 5%.
On the basis of the raw facts and figures such as the standard price of material specified is 40 $ and its standard quantity of the specified material which is to be per unit of product is 80 kg
O'Reilly Beverage Company reported net income of $820,000 for 2013. In addition, the company deferred a $95,000 pretax loss on derivatives and had pretax net unrealized holding gains on investment securities of $45,000.
Alma has used the estimates provided by Dan to determine the revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses.
Consider an investor who, on January 1, 2014, purchases a TIPS bond with an original principal of $101,000, an 10 percent annual (or 5 percent semiannual) coupon rate, and 12 years to maturity.
A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period, has gathered the following data relative to the current year s operations.
All of General Hospitals debt is at an inerest rate of 7.5% on its debt. It is in the 35% tax bracket. 30% of its funding is debt. 70% of its funding is equity, which costs 12%.
You own 300 shares of stock which dropped drastically in value today down to $13.50 a share. You have a margin loan of $2,880. What is the amount of your margin call if the maintenance margin is 40 percent
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