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1. A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to maturity of this bond when it is released?
A) 5.47%
B) 4.00%
C) 0.60%
D) 1.92%
2. A firm issues $170 million in straight bonds at par and a coupon rate of 8.5%. The firm pays fees of 2% on the face value of the bonds. The net amount of funds that the debt issue will provide for the firm is ________.
A) $175 million B) $167 million C) $150 million D) $158 million
Determine the annual financing cost of borrowing each of the following amounts under the credit agreement $1 million and $4 million.
The current price of silver is $30 per ounce. Assume that the storage cost is zero. The 3-month interest rate is 4% per annum (with continuous compounding). A CME silver futures contract is current trading at $28 (per ounce) will mature in three mont..
the friendly national bank holds 50 million in reserves at its federal reserve district bank. the required reserves
Redo the analysis of the Schleifer-Vishny model with this modification, and determine the sign of the investment externality.
You have $12,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 11 percent and Stock Y with an expected return of 8 percent. If your goal is to create a portfolio with an expected return of 9.59 percent, how much ..
OMG Inc. has 7 million shares of common stock outstanding, 5 million shares of preferred stock outstanding, and 4,000 bonds. Suppose the common shares sell for $17 per share, the preferred shares sell for $16 per share, and the bonds sell for 108 per..
Triangular Arbitrage. You go to a bank and are given these quotes: You can buy a euro for 14 pesos. The bank will pay you 13 pesos for a euro. You can buy a U.S. dollar for .9 euros. The bank will pay you .8 Euros for a U.S. dollar. Can you use tria..
Scale versus riskiness tradeoff:- Interpret this condition in terms of a "cost of bringing 1 unit of investment to completion."
Highfield Inc's bonds currently sell for $1,400 and have a par value of $1,000. They pay a $140 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,540. What is their yield to call (YTC)?
On July 1, 2008, Justin Corporation issued $20 million of 8%, twenty-year bonds. Interest on the bonds is paid semiannually on December 31 and June 30 of each year, and the bonds were issued when the market interest rate was 9%. Compute the issue pri..
In exchange for a $460 million fixed commitment line of credit, your firm has agreed to do the following: Pay 3.0 percent per quarter on any funds actually borrowed. Ignoring the commitment fee, what is the effective annual interest rate on this line..
Bill considers himself an average cigarette smoker for the consumes about a carton a week. He wonders how much he could accumulate by the time he reaches 65 if he quit smoking and put his cigarette money into a savings account. The following amounts ..
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