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Question 1: Assume that you are considering the purchase of a 30 year bond with an annual coupon rate of 6.5%. The bond has a face value of $1,000 and makes semiannual interest payments. If you require a 7.50% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for this bond?
Question 2: Now assume market conditions have changed and you are given additional information regarding the bond in problem 1. The bond is now selling for $1,225.00. What is the capital gains yield if you purchase this bond at $1,225.00? (Note that you will not use the price that you calculated in problem #1 to solve problem #2.)
Question 3: Taussig Corp.'s bonds currently sell for $1,250. They have a 7.50% annual coupon rate with interest paid annually, $1,000 par value, and 15 year maturity, but they can be called in 3 years at $1,075.00. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. Under these conditions, what rate of return should an investor expect to earn on these bonds?
Falcon Toot Industries is planning its operations for next year, and Robbie Starksdale, the CEO, wants you to forecast the firm's External funds needed (EFN). Data for use in your forecast are shown below. What is the AFN for the coming year? Doll..
What is the sensitivity of OCF to changes in the variable cost figure? Calculate the change in OCF if there is a $1 decrease in estimated variable costs.
On January 1st, Joes corporation began to show serious interest in Toms Company. Joes was trading at $52 per share with a beta of 1.02 and Toms stock was trading at $28 per share with a Beta is .93.
Determine the purpose of charging different groups of customers different prices? Provide the three broad examples in the Last Word with two additional examples of your own.
Orient Airlines' common stock currently sells for $33, and its eight percent convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2019. What is the conve..
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a stock is expected to pay a dividend of 0.75 at the end of the year. the required rate of return is rs 10.5 and the
What are the major advantages and disadvantages of utilizing debt in a firm's capital structure (the proportion/mix of debt and equity in balance sheet)?
describe your answer for each question in complete sentences whenever it is necessary. show all of your calculations
Your task is to offer a detailed critique of a peer-reviewed article. The article must be related to explaining how political developments and movements have influenced the practice of budgeting and financial management in the public sector. In yo..
What is the dollar size of the issue? Summarize your analysis in a concise management statement not to exceed 100 words.
Question 1. The object-oriented development life cycle consists of
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