The price of the bond today should be

Assignment Help Financial Management
Reference no: EM131060449

A Ford Motor Co. coupon has a coupon rate of 6.75% and pays annual coupons. The next coupon is due tomorrow and the bond matures 32 years from tomorrow. The yield on the bond issue is 6.45%. At what price should this bond trade today, assuming a face value of $1,000?

The price of the bond today should be-

Reference no: EM131060449

Questions Cloud

The firms current earnings per share : If a stock is currently priced at $40 per share and the firm’s current earnings per share is $5, what price would you pay if you forecast new earnings per share to be $6.00 and you require a rate of return for the risk taken at 13%?
Expected dividend and earnings growth rate : What price would an investor requiring a 7% return pay for a stock which just declared a dividend of $5.00 if the expected dividend and earnings growth rate was estimated at 0%? Please show work.
Firm expects earnings and dividends to grow : Consider a stock which just paid a dividend of $2.50. If the firm expects earnings and dividends to grow at a rate of 4%, what price would you pay for the stock if you require a rate of return equal to 9%? Please show work.
Requires an initial investment : You are considering Project B that requires an initial investment of $70. The current present value of its cash flows is estimated to be $100 based on today’s market conditions. You can undertake Project B now or wait for one month to decide. The cur..
The price of the bond today should be : A Ford Motor Co. coupon has a coupon rate of 6.75% and pays annual coupons. The next coupon is due tomorrow and the bond matures 32 years from tomorrow. The yield on the bond issue is 6.45%. At what price should this bond trade today, assuming a face..
How much does the synthetic option cost : Maverick Manufacturing, Inc., must purchase gold in three months for use in its operations. Maverick’s management has estimated that if the price of gold were to rise above $1,555 per ounce, the firm would go bankrupt. Should the company buy a call o..
What is the coupon rate for this bond : To calculate the number of years until maturity, assume that it is currently May 2013. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld. What is the coupon rate for this bond?
What is the over the counter markets : What is the Over the Counter markets? What is the Leverage Ratio if Assets are $1000 and Capital is $150? Eurobank currently has $400 million in transaction deposits on its balance sheet. The current reserve requirement is 10%. What are the reserve a..
Shareholder wealth in a firm is represented : "Shareholder wealth" in a firm is represented by:

Reviews

Write a Review

Financial Management Questions & Answers

  Lower yield than municipal bonds with the same maturity

Do investors in high tax brackets or those in low tax brackets benefit more from tax-exempt securities? Why? At a given point in time, which offers a higher before-tax yield: municipal bonds or corporate bonds? Why? Which has the higher after-tax yie..

  About the accounts payable

A chain of appliance stores, APP Corporation, purchases inventory with a net price of $700,000 each day. The company purchases the inventory under the credit terms of 1/15, net 35. APP always takes the discount, but takes the full 15 days to pay its ..

  The number of electric stapler sales budgeted

Melbourne Company manufactures and sells electronic staplers for $16 each. If 10,000 units were sold in December and management forecasts 4% growth in sales each month, the number of electric stapler sales budgeted for March should be:

  There is expected to be no salvage value for the equipment

Lewis Industries looking at a project that will require a $100,000 investment in fixed assets and another $15,000 in net working capital, which will be recovered at the end of the project. The project is expected to produce sales of $110,000 with ass..

  Mutual life insurance has a risk-based capital ratio

Ashley is an actuary who is employed by the Nebraska Department of Insurance. Her duties include monitoring the financial position of insurance companies doing business in Nebraska. Based on an analysis of annual financial statements that insurers ar..

  In the real world is it possible to construct a portfolio

In the real world, is it possible to construct a portfolio of stocks that has an expected return equal to the risk-free rate? Provide examples.

  How much money will you have on the date of last payment

A friend owes you money. He offers to pay you $1,000 today, $1,000 a year from now and $1,000 exactly two years from now. If 10% is the prevailing rate you expect on your investments, what is the present value of this arrangement? He offers to pay yo..

  Same company cost of capital for evaluating all projects

If a firm uses the same company cost of capital for evaluating all projects which of the following is likely?

  Project projected IRR can be less than the WACC

Hart corp. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected. Year: 0 1 2 3 Cash flows: -$1,..

  Bondholders to convert their debt to equity of the company

Why does a bankrupt firm under Chapter 11 generally require its bondholders to convert their debt to equity of the company after the reorganization?

  Considering new product launch

You are considering a new product launch. The project will cost $1,950,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 180 units per year; price per unit will be $24,000, variable c..

  Securitys price sensitivity to an interest rate change

The greater a security's coupon, the lower the security's price sensitivity to an interest rate change, ceteris paribus.

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!

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