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Consider the following. a. What is the duration of a two-year bond that pays an annual coupon of 11 percent and whose current yield to maturity is 15 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161)) Duration of a bond b. What is the expected change in the price of the bond if interest rates are expected to increase by 0.6 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Expected change in the price $ ReferenceseBook & Resources
How do Merger and Acquisition (M&A) decisions impact the value of a business?
Crater Industries just paid an annual dividend of $1.50 and is expected to pay annual dividends of 1.65 and 2.805 per share the next two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 5 percent per ye..
What are the biggest determinants of the year-to-year changes in IBM’s market-value and book-value based debt ratios, respectively?
Find the present value of $4,000 under each of the following rates and periods.
Price A $1000 par value bond will mature in 10 years. This bond pays a coupon of $90 every year. If investors require an annual return of 8%, what is the current price of this bond? Assume annual payments.
Stock valuation with non-constant growth: Storico Co. just paid a dividend of $5.00 per share. The company will increase its dividend by 15 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reach..
BU340-What is the expected return of each asset? What is the variance of each asset? What is the standard deviation of each asset? What is the price of the bond if the bond matures in 5, 10, 15, or 20 years?
A customer come to you and asks to receive valuable advice supported with calculations on the purchase of used car. Assuming the car costs $91,500 and would be fully financed from bank for 4 years and at interest of 7%, Total amount of interest the p..
A bank decides to create a five-year principal-protected note on a non-dividend-paying stock by offering investors a zero-coupon bond plus a bull spread created from calls. The risk-free rate is 4% and the stock price volatility is 25%.
A corporation enters into a $35 million notional principal interest rate swap.- Determine the fixed rate on the swap.- Calculate the first net payment on the swap.
Tom's Company are expected to grow at an annual rate of 14% over the next 5 years and then slow to a constant rate of 10% per year. Tom's currently pays a dividend of $0.36 per share. What is the value of Tom's stock to an investor who requires a 16%..
Thomas Brothers is expected to pay a $1.3 per share dividend at the end of the year (that is, D1 = $1.3). The dividend is expected to grow at a constant rate of 4% a year. The required rate of return on the stock, rs, is 13%. What is the stock's curr..
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