What is the likely rating of the bonds? are they junk bonds

Assignment Help Operation Management

Reference no: EM131477313

HMK Enterprises would like to raise $10 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1000 and a coupon rate of 6.5% (annual payments). The following table summarizes the yield to maturity for five-year (annual-pay) coupon corporate bonds of various ratings: Rating AAA AA A BBB BB YTM 6.20% 6.30% 6.50% 6.90% 7.50% a. Assuming the bonds will be rated AA, what will the price of the bonds be? b. How much total principal amount of these bonds must HMK issue to raise $10 million today, assuming the bonds are AA rated? (Because HMK cannot issue a fraction of a bond, assume that all fractions are rounded to the nearest whole number.) c. What must the rating of the bonds be for them to sell at par? d. Suppose that when the bonds are issued, the price of each bond is $959.54. What is the likely rating of the bonds? Are they junk bonds?

Reference no: EM131477313

Questions Cloud

Determine the option implied volatility : A put option on a stock is priced at $5. The option has an exercise price of X = $25. The stock's current price is S0 = $25, the option's time to maturity.

About future interest rates : What expectations are investors likely to have about future interest rates?

United states-based corporations : Of the top 20 global brands, 24 of them (70 percent) are from United States-based corporations. What effects might this weighing have on the global consumer?

Previous artistic traditions in work : Explain why they chose to incorporate references to previous artistic traditions in their work.

What is the likely rating of the bonds? are they junk bonds : Assuming the bonds will be rated AA, what will the price of the bonds be? What is the likely rating of the bonds? Are they junk bonds?

Why did mlk want to create this type of tension : Describe the type of tension hat MLK's nonviolent movement aimed to create? Why did MLK want to create this type of tension?

How are your own views of therapy shaped by each of issues : The choice of individual versus family therapy can be based on technical issues which approach works best for a given problem.

Origins of the american indians : Explain the origins of the American Indians and compare the general cultures that they develop in south, North and central America?

Implement certain technologies at each of remote locations : School realizes that local systems administrators need help implementing certain technologies at each of remote locations, as well as final WAN configurations.

User Account

All Pages