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You just started work at a wealth management firm and your boss asks you to evaluate a 30-year bond with a face value of $1,000 that, according to the prospectus, you can purchase next month (01-June-2016) when it is initially issued. The bond is designed to provide a 6.5% yield-tomarket (YTM) and makes annual 01 June coupon payments. Your plan is purchase the bond for face value (par) at issuance.
A. What is the coupon (interest rate) attached to this bond? B. If the YTM is expected to remain constant, what is the minimum price you would accept to sell the bond on May 31, 2023, the day before you receive the 7th coupon payment? (Show your work by solving without the “PRICE” function first, then check with the function if you want.) ?
B. What is the duration on June 2, 2023, two days after the sale (i.e., the new buyer has already received the June 1, 2023 coupon payment)? (Show your work by solving using the stream of cash inflows—without the “DURATION” function. You can then check with the function if you want.)?
C. What is the modified duration at that same time.
McDonald's) The following figures are taken from the 2003 financial statements of McDonald's and Wendy's. ! Figures are in million dollars. I n 2003, what were McDonald’s inventories turn? What were Wendy' s inventory turns?
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Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 11% of its $100 par value. Preferred stock of this type currently yields 7%. Assume dividends are paid annually. What is the value of Rolen's preferred stock? Rou..
XYZs bonds have 3 years remaining to maturity. The bonds have a face value of 10%. They pay interest annually and have 8% coupon rate. What is their current yield? Motors Co stock has a required rate of return of 11.50% and it sells for 25$. Dividend..
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