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You own a bond with an annual coupon rate of 6% maturing in two years and priced at 88%. Suppose the probability is 11% that at maturity the bond will default and you will receive only 41% of the promised payment. Assume a face value of $1,000
What is the bonds expected yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
The Newton Company has 120,000 shares of stock that each sell for $65. Suppose the company issues 9,000 shares of new stock at the following prices: $65, $50, and $45. What is the effect of each of the alternative offering prices on the existing pric..
Shanken Corp. issued a bond with a maturity of 20 years and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The book value of the debt issue is $40 million. What is your best estimate of t..
Improve the long-term intrinsic value of the firm - Find a web article related to time value of money. Post a link to the article and respond to the article, discussing why you find it especially interesting. Also, and critically, how would you imp..
A stock is expected to pay a dividend of $1.00 next year and $1.50 in 2 years, after that the dividend is expected to grow at a constant rate of 4% per year forever. The stock s required rate of return is 11%. What is intrinsic value of the stock tod..
Capstone Marketing Group has total assets of $6,348,000, sales of $3,429,945, and net income of $850,000. The company expects its sales to grow by 12 percent next year. All assets and costs (including taxes) vary directly with sales, and the firm exp..
Shares of SoHot Donuts common stock are currently selling for $15. Next year’s dividend is expected to be $1.50 per share and the market rate of return is 13%. At what rate is the dividend projected to be growing?
Erin invests $3750 spread across three funds; Fund A, Fund B, and Fund C. Over the course of the following year, A(in dollars) was equal to %20 of the total return from all three funds fir the year. The amount invested in Fund B was equal to 1.2 time..
A local bank advertises the following deal: Pay us $100 at the end of each year for 12 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever. Calculate the present value of your payments to the bank if the intere..
(Cost of preferred stock) The preferred stock of Gator Industries sells for $34.35 and pays $2.74 per year in dividends. What is the cost of preferred stock financing? The flotation costs adjusted initial outlay for issuing the preferred share are?
A firm’s existing assets have an expected return of 16% and an associated standard deviation of 20%. A proposed project has an expected return of 26% and an associated standard deviation of 30%. Calculate the reward to risk ratio for the firm. Calcul..
What important factors, in addition to quantitative factors, should a firm consider when it is making a capital structure decision? How do these factors play in the decision?
Calculate the price (per $100 par value), to three decimal places, of a three-year fixed-coupon bond paying a coupon rate of 9% pa if the bond pays coupons every half year. Assume that the bond is default-free and that a coupon has just been paid -- ..
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