User Account

All Pages

Calculate the price of the callable bond

Assignment Help Business Management
Reference no: EM133058014

GoGo Inc. plans to issue a perpetual callable bond that pays 11.4% annual coupons. The current interest rate is 8%. Two years later, there is 15% probability that the interest rate will be 4.5%, 30% probability that the interest rate will be 10% and 55% probability that the interest rate will be 12%. The bond is callable at par value of 1,000 plus 3 additional coupon payments and it will be called if the bond price is greater than the call price.

  1. Calculate the price of the callable bond.
  2. What is the value of the call option?
  3. What is the minimum coupon rate that the bond will be certainly called in two years?

Reference no: EM133058014

Questions Cloud

Find fair price to pay for investment : You are considering an investment that will pay to you $25,000 at the end of 10 years. Investments of similar risk are offering a 6% rate of return.
What is the average daily collection float : A mail-order firm processes 6500 checks per month. of these, 80% are for $60 and 20% are for $ 95. the $ 60 checks are delayed three days on average. the $95 ch
Determine the amounts to be reported on each employee : Determine the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 20Y8
Learning more about the alternative assets industry : Why should you be interested in learning more about the alternative assets industry, especially as a young investor or student?
Calculate the price of the callable bond : What is the minimum coupon rate that the bond will be certainly called in two years?
Shares of deep space nine : 1. At your discount brokerage firm, it costs $9.50 per stock trade. How much money do you need to buy 300 shares of Bugs Bunny Inc. (BUG), which trades at $22.6
Write up you essay on developmental language disorder : Write up you essay on Developmental Language Disorder - Relation to bilingualism
Estimate the expected value of p : In the above table, P * is the euro price of the asset held by the U.S. firm and P, the dollar value of the asset is not shown
What is Cash Flow from Operating Activities : Querrey, Corp reported the following: Net, Deferred Tax Liabilities $10,000 increase. What is Cash Flow from Operating Activities

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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