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1. The price of a 1-year zero is $96.00, the price of a 2-year 10% coupon bond is $107.30 and the price of a 3-year 8% coupon bond is $102.25. Use the bootstrap method to calculate all zero rates.
2. Given the bonds in Problem 7, what is the price of a 3 year 5% coupon bond? What is its yield?
*Assume that all bonds have a par (face) value of $100, Also assume that all coupon bonds pay annual coupons, and that a coupon payment has just been made (unless otherwise noted)
Identify one trend or force in each of the specified microenvironments (the company, suppliers, marketing intermediaries, competitors, publics, and customers) and describe how it would affect 'your' company.
What's the future value of a 4%, 5-year ordinary annuity that pays $700 each year? Round your answer to the nearest cent. If this was an annuity due, what would its future value be? Round your answer to the nearest cent.
Firm K’s shares sell today for $45. It is forecast that the share price will be $51 at the end of one year. Also at that time a dividend of $2.50 is expected to be paid. Firm K’s β is 0.87, the riskless return is 3 % and the market risk premium is 7 ..
Calculate the firms earnings per share (EPS) for each year, recognising that the number of shares issued has remained unchanged since the firm's inception. Comment on the EPS performance in view of your response to question 1a.
Counts accounting has a beta of 1.50. The tax rate is 40%, and Counts is financed with 30% debt. What is Counts' unlevered beta?
A share of common stock has a current price of $82.50 and is expected to grow at a constant rate of 10 percent. If you require a 14% rate of return, what is the current dividend of this stock?
What factors may contribute to the decline in usefulness of operating assets? Should the choice of depreciation method be related to these factors? Must a company choose just one method of depreciation for all assets? Explain
If $120,000 is borrowed for a home mortgage, to be repaid at 9% interest over 30 years with monthly payments of $965.55, how much interest paid over the life of the loan?
May Industries has a bond outstanding that sells for $780. The bond has a coupon rate of 7.20 percent and 11 years until maturity. What is the yield to maturity of the bond?
Terrell Enterprises recently paid a dividend, D0, of $1.50. It expects to have non constant growth of 25% for 2 years followed by a constant rate of 6% thereafter. The firm's required return is 12%. What is the firm's intrinsic value today?
Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of .7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 percent, the reward-to-risk ratios for stocks Y ..
In foreign countries it is quite common for banks to own nonfinancial companies and vice versa. Do the U.S. laws restricting banking and commerce because U.S. banks to be at a competitive disadvantage internationally? What are the benefits of such re..
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