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Bond J has a coupon rate of 4.2 percent. Bond S has a coupon rate of 14.2 percent. Both bonds have ten years to maturity, make semiannual payments, and have a YTM of 9.4 percent. Requirement 1: If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).) Percentage change in price Bond J % Bond S % Requirement 2: If interest rates suddenly fall by 2 percent instead, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. The firm can sell new $1000 par value bonds with a 15 year maturity at a price of $953 that carries a coupon interest rate of 12.6 percent that ..
What is the purpose of working capital? What is the working capital cycle and why must it be managed?
You know the following. ATO, ITO and FATO are 2, 6, and 2.5 respectively while for the industry they are 4.4, 19 and 4 respectively. The current ratio and quick ratio are 1 and 1.5 for the firm and 2.3 and 2.0 for the industry respectively. Net profi..
Company A's basic earning power (BEP) exceeds its cost of debt financing (rd). If it increases its debt ratio, then which of the following statements is CORRECT? a. Company A will increase its return on assets (ROA). b. Company A will increase its hi..
You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. If the appropriate interest rate is 6 percent, what is the present value of the cash flow stream that the company ..
Best Western has $1,000 face value bonds outstanding. These bonds pay interest semi-annually, mature in 10 years, and have a 5 percent coupon. The current price is quoted at 95.5. What is the YTM? %?
An infinite series of cash flow pays $10 one year from today. After that the annual cash payment increases 5% per year forever. Does the infinite series of cash flow have a finite value today?
The price of $8000 face value commercial paper is $7930 . if the annualized discount rate 4% when will the paper mature ? if the annualized investment rate % is 4% , when the paper mature
Compute the expected net cash flows for year 7. Include in your year 7 calculations the proceeds from the salvage value of the masher and recovery of net working capital at the beginning of year 8.
GEORGE's Warehouse signed a six-year capital lease on January 1, 2014, with payments due every December 31. Interest is calculated annually at 10%, and the present value of the minimum lease payments is $16,425. Calculate the amount of the annual pay..
Draw and solve the Cash Flow Diagram for Future Value F. This is a 10 year Cash Flow, and interest rate is a compounded 7%). What is the Future Value F of this Engineering Cash Flow Investment?
Joe investor has noted that the current price of MG Company is 61.50 and that its current P/E ratio is 15 and its current payout ratio for dividends is 40%. Based on his analysis of the next three years, Joe anticipates the dividiend annual compound ..
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