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1. B Corporation has $1000 par value bonds with 9 years left to maturity, a stated annual coupon rate of 6.5 percent (with annual interest payments).
What are these bonds worth today if the required market rate of return is 6 percent? _________
What are these bonds worth today if the required market rate of return is 5 percent? __________
What are these bonds worth today if the required market rate of return is 3 percent? __________
What is the relationship between the coupon rate, changes in the market rate and the value of these bonds?
Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years.
A company is evaluating two competing investments. Investment X has a cost of $100,000 and a NPV estimated at $35,000. Investment Y has a cost of $220,000 and a NPV estimated at $35,500. Taking everything into account, you would recommend the company..
An investor in the 39.6% marginal tax bracket owns land that is a capital asset with a $50,000 basis and a holding period of 3 years. The investor wishes to sell the land such that he has $120,000 cash after taxes are paid. Instead of land, assume th..
Smart Banking Corp. can borrow $5 million at six percent annualized, and it can use the proceeds to invest in Canadian dollars at nine percent annualized over a six-day period. Based on this information, which investment strategy should Smart Banking..
If the same company from the previous question used 5% ROR for loans, 9% ROR for bonds, what is the Weighted Average Cost of Capital (WACC)?
Given the following information on a bond, if the interest rate increases by 1%( that is, from to 6%), what is change in price of the bond based on duration?
BBY’s price drops to $52 per share what are your actual margin and rate of return for this investment?
The intercept of the security market line is equal to. The risk premium for a security is based on which one of the following types of risk?
The market has an expected return of 9% and the risk-free rate is 3%. What is the alpha for the fad followers?
A 6.65 percent coupon bond with fifteen years left to maturity is priced to offer a 8.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 8.0 percent. What is the change in price the bond will experience in dollar..
What did investors expect the interest rate to be on the one-year Treasury bill two years from that date if the term premium on a two-year Treasury note was 0.02%.
By how much would NPV increase if the firm depreciated its investment using the 5-year MACRS schedule?
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