What should be the coupon rate offered to trade at par

Assignment Help Financial Econometrics
Reference no: EM13335988

A company releases a five-year bond with a face value of $1000 and coupons paid semiannually. If market interest rates imply a YTM of 6%, what should be the coupon rate offered if the bond is to trade at par?

Reference no: EM13335988

Questions Cloud

Calculate the projects payback and mirr : The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the project's 5-year life.
New shares issued in a stock dividend : New shares issued in a stock split. New shares issued in a stock dividend. Cash proceeds from selling one of its divisions. Accrued interest on zero coupon bonds that it issued. Its monthly depreciation expense.
Consistent with the corporate strategy : Operating plans provide management with detailed implementation guidance, consistent with the corporate strategy, to help meet the corporate objectives. These operating plans can be developed for any time horizon, but many companies use a 5-year hori..
Find must the current in the coil be : A closely wound, circular coil with radius 2.10cm has 830 turns. What must the current in the coil be if the magnetic field at the center of the coil is 5.00×10?2
What should be the coupon rate offered to trade at par : A company releases a five-year bond with a face value of $1000 and coupons paid semiannually. If market interest rates imply a YTM of 6%, what should be the coupon rate offered if the bond is to trade at par
Project risk expected return : Project Risk Expected Return
If interest rate parity holds among the three countries : If interest rate parity holds among the three countries, Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
Describe the key elements of the securities markets : Describe the key elements of the securities markets, and how the markets drive financial transactions, decision making, and risk analysis.
Change in the bankruptcy code made bankruptcy less costly : If a company were to issue debt and use the money to repurchase common stock, this would reduce its basic earning power ratio. (Assume that the repurchase has no impact on the company’s operating income.) If a change in the bankruptcy code made bankr..

Reviews

Write a Review

 

Financial Econometrics Questions & Answers

  Determine what is the companys expected growth rate

Kahn Inc. has a target capital structure of 65% common equity and 35% debt to fund its $10 billion in operating assets. Furthermore, Kahn Inc. has a WACC of 14%, a before-tax cost of debt of 8%, and a tax rate of 40%

  Determine the present value of an annuity due per year

Determine the present value of an annuity due of $1,000 per year at 10 years discounted back to the present at an annual rate of 10 percent. What would be the present value of this annuity due

  Determine how sensitive is ocf to changes in quantity sold

Consider a three-year project with the following information: initial fixed asset investment = $870,000; straight-line depreciation to zero over the five-year life; zero salvage value; price = $34.05; variable costs = $22.55;

  Describe why the needed funds are relatively small

Suppose your company needs $15 million to build a new assembly line. Your target debt?equity ratio is .60. The flotation cost for new equity is 8 percent, but the flotation cost for debt is only 5 percent.

  Should pettit relax collection efforts at opportunity cost

The Pettit Corporation has annual credit sales of $2 million. Current expenses for the collection department are $30,000, bad debt losses are 2% and the days sales outstanding is 30 days.

  What interest rate does bob jones need to make on a tax

What interest rate does Bob Jones need to make on a taxable investment to equal the 6% he can make on a tax free bond, assuming he is in the 40 percent tax bracket

  Determine what was the earnings per share for the year 2010

allen lumber company had earnings after taxes of $547,000 in the year 2009 with 400,000 shares outstanding. on january 1, 2010, the firm issued 26,000 new shares.

  Determine what are the alternatives in the instance

Your current supervisor has asked for your assistance with shredding some office documents. You have some understanding of the records retention policy for your company

  Calculate the npv in mexican pesos

The projected cost of buying the equipment and shipping it is $3.7 million. Once the project begins operations, it is expected to last for 5 years (assume straight line depreciation).

  What was hospitals 2006 cash flow and total profit margin

A hospital reported net income for 2006 of $2.5 million on total revenues of $40 million. Depreciation expense was $500,000. What was the hospitals 2006 cash flow and total profit margin

  What would the nominal rate of interest on acme bonds

Inflation is expected to remain constant in the future at 3.3%. Default-risk premium is expected to remain constant at the rate of 1.8% . The liquidity risk is only 0.03% on the bonds.

  Compute the cost of debt before taxes and after taxes

A company issues 15-year, $1,000 par-value bonds, with a coupon rate of 5%. The bonds are sold for $619.70. The tax rate is 30%. Compute the cost of debt before taxes and after taxes.

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd