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At the beginning of 2014, ABC Corp. issued (sold) $50 million in 20-year callable bonds at par value of $1,000 paying an 8% annual coupon rate that is paid semiannually. The bonds are callable after 5 years for a call premium equal to one annual coupon payment. During 2014, interest rates dropped significantly and ABCs bonds are now trading for $1,130.25. a. What is the amount of the semiannual payment received (PMT) from investing in this bond? b. What is the new yield to maturity (YTM) of the bonds at the beginning of 2015? c. What is the new yield to call (YTC) at the beginning of 2015? d. Should investors expect to receive YTC or YTM? e. How much will the firm save or lose each year in interest if the existing bonds are called and reissued? You may ignore any costs involved in calling/re-issuing the bonds.
Juan Garza invested $35,000 10 years ago at 12 percent, compounded quarterly. How much has he accumulated?
question 1 is it possible to have a portfolio of two securities whose s is less than the s of either of the two
What is the after-tax cost of preferred stock that pays a 12% dividend and sells at par if the firm's tax rate is 35%?
Computation of shares of common stock and cash dividends and what new cash dividend per share amount will result in the same total dividend income as you received before the stock split
Assuming that the MARR is 11% and on the basis of an internal rate of return analysis, which alternative would you advise the DOT to consider?
A $5000 bond with a coupon rate of 5.4% paid semiannually has five years to maturity and a yield to maturity of 7.5%. If interest rates falls and the yield to maturity decreases by 7.8% , what will happen to the price of the bond?
g mart inc. is considering the acquisition of equipment to expand its sales. the initial cost of the equipment is
The clinic is projected to have an average of 100 patients per month. Calculate your break-even analysis for the clinic? What is your financial recommendation?
Consider two firms A and B that are identical in all respects except capital structure. Firm A has $160 million in equity outstanding and $40 million in bonds outstanding. Firm B has $200 million in equity outstanding and $0 million in bonds outs..
By what percentage did the cross exchange rate of the Polish zloty in Swedish kronor (that is, the number of kronor that can be purchased with one zloty) change over the past year?
The new CFO wants to employ enough debt to raise the debt/assets ratio to 40%, using the proceeds from borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?
what are the 3 variables that according to fischer black any investor should consider to calculate the optimal hedge
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