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Question: Your broker is offering you two bonds issued by two U.S. companies. One bond has an AA credit rating and the other has a BB rating from Standard and Poor's. Both bonds have a par value of $ 1.000, a coupon rate of 10%, and a maturity of 10 years. The required rate of return by investors is 8% for AA-rated bonds and 12% for BB-rated bonds. Please answer the following questions. 1) Explain the purpose of credit ratings. 2) Explain why the required rate of return is higher for BB-rated bonds than for AA-rated bonds.
kingrsquos mfg. inc. has 12000 bonds outstanding that have a 6 coupon rate. the bonds are selling at 98 of face value
why does post-earnings-announcement drift challenge the efficient-markets
You should write a memo to Michael Silver. He is extremely well versed in finance. Michael Silver is also looking for advanced analysis with evidence of critical thinking, particularly as it relates to optimal capital structure
When the variable cost of outsourcing is $4 per unit, what is the break-even quantity in this case? Please provide the formula, at least one step of calculation, and the correct answer for full credit.
if you put 200 in a savings account at the beginning of each year for 10 years and then allow the account to compound
An example is the difference between an appropriation and an encumbrance. Often, these two are confused with one another. Another important part of postsecondary budgeting includes the knowledge of fixed assets.
There are several corporate scandals that happened in the United States before the year 2000. The scandals opened up discussions for new regulations and ways of dealing with fraud and close monitoring of activities of companies by relevant market ..
norton company has a debt-to-equity ratio of 1.65 roa of 11.3 percent and total equity of 1322796. what are the
Consider the following three bonds with semi-annual coupon frequency and $1000 face value.
The aftertax cost of debt is 9%, the cost of preferred stock is 12% and the cost of common equity (in form of retained earnings) is 14%. Calculate the weighted average cost of captial. Please show the work. Thank you
Estimates the long-run future expected rates of return.
Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return? Round your answer to two ..
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