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Discussion on Bond
Having determined how to calculate the value of a bond (Bond Price) and the effective rate of return of bond (i) you should now be able to derive or explain some key bond relationships
Bond Price = Coupon X 1 - 1/(1+i)N + Face Value X 1 i (1+i)
Using the above bond formula, your reading assignments and basic logic, answer each of the following relationship questions in a brief one paragraph posting
1. Logically explain in your own words the following bond relationship and why it works: "The value of a bond is inversely related to changes in the investor's present required rate of return (the current interest rate)."
2. Explain what bond market condition would result the market price of a bond being less than par and what bond market condition would result in the market price of a bond being greater than par.
3. Explain what happens to the market price of a bond as the bond approaches its maturity date.
4. Logically explain in your own words the following bond relationship, and why it work so: "Long term bonds have a greater interest rate risk than do short term bonds."
Monroe and Cox provide eight pricing practices of companies that have a negative effect on profitability. Which do you consider to be the easiest to avoid or fix?
xavier industries common stock sells for 47.50. xavier recently paid a 2.25 dividend to its common shareholders. the
liberty corp. was set up to take large risks and is willing to take the greatest risk possible. benson co. is more
In the analysis done so far we have not considered the effects of flotation costs. Assume now that Nealon is raising a total of $40 million using the above financing mix.
A standard cost is a predetermined amount that-Should be incurred under relatively efficient operating conditions-Will be incurred for an operation or a specific objective-Must occur for an operation or a specific objective
1.describe a business situation other than what has already been selected by fellow students or selected from the team
Write a short memo to management explaining your analysis and making a recommendation. Should the project be accepted? Why or why not? (i.e. Explain what your numerical answer means.)
The new bonds would be issued when the old bonds are called. Should the bonds be refunded? Calculate the NPV of refunding.
Computation of required return and If MUG stock currently sells for $48 per share then what is the required return
The finance department of a large corporation has evaluated a possible capital project using the NPV method, the Payback Method, and the IRR method. The analysts are puzzled, since the NPV indicated rejection, but the IRR and Payback methods both..
Determine the annual investment in an equally weighted portfolio
Horatio and Kelly were divorced at the end of last year. Determine the filing status of Horatio and Kelly for the current year in the following independent situations:
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