Reference no: EM131923436
Question: Using Morningstar, look up the BlackRock Corporate High Yield Fund (ticker HYT).
a) Write the balance sheet for HYT (Note: You just need a simple balance sheet like what we have done in class. It should have the aggregate equity, debt, and assets. Everything you need is on the main Morningstar page for HYT- you don't need their full, detailed financial statements).
b) Assume HYT takes out an additional $50M in debt to make additional investments. What is the new leverage ratio (you may want to recreate the balance sheet).
c) HYT invests primarily in high-yield (and therefore high-risk) bonds. Assume these bonds pay an average of 8%, and assume HYT acquires debt at an interest cost of 1.5%. If you invest in the fund, what is your expected annual percent return net of the interest costs? Use the leverage from part b and calculate on a portfolio basis instead of a per-share basis (this will make it easier to deal with interest costs).
d) Continuing from part (b), a wave of corporate bond defaults occurs, and the value of HYT's investments falls by $100M. On a percentage basis, what is the return to 1) the portfolio and 2) HYT's shareholders as a result of this default wave?
|
Write a business email to thomas zorn
: You are the purchasing manager for Outfitters, a new store scheduled to open February 1, 2017, in Madison, Wisconsin.
|
|
What is the fee to make the client indifferent
: What is the fee (percentage of the investment in your fund, deducted at the end of the year) that you can charge to make the client indifferent between.
|
|
Is the situation more one of prospective dating
: Although people certainly create the situations they perceive, what they perceive is also influenced by what they do.
|
|
What happens to the signaling value of a persons education
: Discuss what happens to the signaling value of a person's education. Can there be a perfectly separating equilibrium in this labor market?
|
|
What is the new leverage ratio
: Assume HYT takes out an additional $50M in debt to make additional investments. What is the new leverage ratio (you may want to recreate the balance sheet).
|
|
Degree of operating leverage
: Between 2009 and 2010, the Smartbook Printing Company's data showed that its volume of sales increased from $1,583,612 to 1,979,515
|
|
What happens to a worker''s optimal amount of schooling
: Suppose that the skills acquired in school depreciate over time. What happens to a worker's optimal amount of schooling if the rate of depreciation increases?
|
|
Analyze how general mills represents and advances the goals
: General Mills represents the goals of its stakeholders by finding efficiencies in procurement, production, and distribution of its products.
|
|
Determine the equal amount the couple must save
: Suppose a young couple with an 8-year old son attempt to save for their son's college expenses in advance. Assuming that he enters college 10 years.
|