What is the yield to call of the bond

Assignment Help Financial Management
Reference no: EM131043490

A 6.75 percent coupon bond with 29 years left to maturity can be called in six years. The call premium is one year of coupon payments. It is offered for sale at $1,075.35. What is the yield to call of the bond? (Assume interest payments are semiannual.) (Round your answer to 2 decimal places.)

Reference no: EM131043490

Questions Cloud

Basic earning power exceeds its cost of debt financing : Company A's basic earning power (BEP) exceeds its cost of debt financing (rd). If it increases its debt ratio, then which of the following statements is CORRECT? a. Company A will increase its return on assets (ROA). b. Company A will increase its hi..
Liquid assets-which tend to have lower bankruptcy costs : Firms with more liquid assets, which tend to have lower bankruptcy costs, tend to use less debt. If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.
Deposits money for retirement : Kevin is planning to retire in 15 years. He deposits money for his retirement at 8% compounded monthly. It is estimated that the future general inflation (f bar) rate will be 4% compounded annually. What deposit must he make each month until he retir..
Earnings before interest-taxes-depreciation and amortization : Consider a two-year project requiring an investment of - $1,000 at t = 0 and producing earnings before interest, taxes, depreciation, and amortization (EBITDA) of $700 and $800 in years t = 1 and t = 2, respectively. The investment at t = 0, which wi..
What is the yield to call of the bond : A 6.75 percent coupon bond with 29 years left to maturity can be called in six years. The call premium is one year of coupon payments. It is offered for sale at $1,075.35. What is the yield to call of the bond?
How much is investor willing to pay for this preferred stock : Corner Creation Corp preferred stock pays annual dividend of $3 per share. If the current interest rate is 5%, how much is an investor willing to pay for this preferred stock?
What is the effective rate of interest : The Smart company plans to borrow $750,000 for one year from Excellent Credit Resource Bank at an interest rate of 12% and they require a 20 percent compensating balance. What is the effective rate of interest? (use 360 day year)
Operating results : Quarles Industries had the following operating results for 2015: sales = $29,820; cost of goods sold = $19,810; depreciation expense = $5,300; interest expense = $2,640; dividends paid = $1,500. At the beginning of the year, net fixed assets were $17..
Financed by a combination of common stock : Suppose that it is financed by a combination of common stock and $1.08 million of debt. The interest rate on the debt is 9%, and the corporate tax rate is 35%. How much profit is available for common stockholders after payment of interest and corpora..

Reviews

Write a Review

Financial Management Questions & Answers

  In tight housing markets

In tight housing markets, rent controls are often applied to hold the price of housing to a reasonable level. How does this policy affect the relative gains of tenants and landlords, and the allocative function of prices?

  In each of the theories of capital structure

In each of the theories of capital structure, the cost of equity increases as the amount of debt increases. So why don't financial managers use as little debt as possible to keep the cost of equity down? After all, aren't financial managers supposed ..

  What is the amount of each annuity payment

Uptown Insurance offers an annuity due with semi-annual payments for 25 years at 6 percent interest. The annuity costs $200,000 today. What is the amount of each annuity payment?

  Most us corporate bonds are investment grade

Most US corporate bonds are investment grade. Most US corporate convertible bonds are investment grade. Investors react negatively (i.e., a

  The largest segment of the corporate bond market consists

The largest segment of the corporate bond market consists of

  What is the maturity risk premium-real risk free rate

The real risk free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year treasury security yields 6.2%. What is the maturity risk premium for the 2-year security?

  What is the bonds coupon rate

A bond that matures in 5 years is currently trading at $950. The yield to maturity on the bond is 6.5% and the bond makes coupon payments annually. Face value is $1000. What is the bond's coupon rate?

  How much should save each month

Sarah wants to go buy a house in Hawaii 15 years from now. She estimates she'll need $400,000 at that time to make this purchase. She plans to save each month at the end of the month for the next 15 years, and invest it at a rate of 8% a year, compou..

  What factors affect a firm''s exposure to exchange-rate risk

What are Divas projected profits for the fiscal year ending September 1995 - what factors affect a firm's exposure to exchange-rate risk? How much exposure to exchange rate risk does Diva Shoes have in April 1995?

  Currency futures definition

Currency Futures Definition. What are currency futures? How do they differ from currency forwards?

  What was the approximate real return

A stock had a return of 5.7 percent last year. If the inflation rate was 1.6 percent, what was the approximate real return?

  At what price will the stock reach an equilibrium

A share of stock with a beta of .77 now sells for $50. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 4%, and the market risk premium is 8%. Suppose investors believe the stock will sell for $52 at year-end. Is the st..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd