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DLQ Inc. bonds mature in 12 years and have a coupon rate of 6 percent. If the market rate of interest increases, then the
Coupon rate will also increase.
Current yield will decrease.
Yield to maturity will be less than the coupon rate.
Market price of the bond will decrease.
Coupon payment will increase.
Sqeekers Co. issued 13-year bonds a year ago at a coupon rate of 8.5 percent. The bonds make semi annual payments and have a par value of $1,000. If the YTM on these bonds is 6.8 percent, what is the current bond price?
Your friend just won the lottery. He has a choice of receiving $50,000 a year for the next 20 years or a lump sum today. The lottery uses a 15% discount rate, compounded monthly. What would be the lump sum your friend would receive?
the firm manufactures a global positioning system gps that sells for 2000 with cost of goods sold hardware 30 and
Tool Makers, Inc. uses tool and die machines to produce equipment for other firms. The initial cost of one customized tool and die machine is $850,000. This machine costs $10,000 a year (after-tax) to operate. Each machine has a life of 3 years befor..
Smith’s company is selling a bond with the following features: 5 years to maturity, face value of $1000, coupon rate of 2% (semiannual coupons) and yield to maturity of 4% APR. What is the price of Smith’s company bond?
Suppose oil forward prices for 1-, 2-, and 3-year contracts are $20, $21, and $22. The 1-year effective annual interest rate is 6%, the 2-year interest rate is 6.5%, and the 3-year interest rate is 7%. What is the price of a 2-year swap beginning in ..
Briefly explain the following statement: The standalone risk of an individual corporate project may be quite high, but viewed in the context of its effect on stockholders’ risk, the project’s true risk may be much lower.
We begin the capital budgeting process by determining the incremental earnings of a project. The marginal corporate tax rate is the tax rate the firm will pay on an incremental dollar of pretax income. Investments in plant, property, and equipment ar..
Northern Gas recently paid a $1.80 annual dividend on its common stock. This dividend increases at an average rate of 6.9 percent per year. The stock is currently selling for $25.91 a share. What is the market rate of return?
Mr. and Mrs. Moss, ages 70 and 64, have major medical and dental insurance provided by Mrs. Moss's employer. This year, they incurred the following unreimbursed expenses: Routine office visits to doctors and dentists ...$940 Emergency room visits...4..
Local communities, states, and even countries often compete to get large firms to locate in their area. Using the internet or other resources, describe at least one example of a major firm located in a new city, state, or country and list the benefit..
Kathy wants to buy bonds on the market with 10.5 years to remaining maturity, a current yield to maturity of 10%, and current price of 102 (total par - $1,000,000). The bonds make semi annual payments. What must the annual coupon rate be on the bonds..
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