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1. A 10-year, 5% semiannual coupon bond, with a par value of $1,000 is 1 year old, and may be called in another 3 years at a call price of $1,045. Assume you purchase this bond today for $1.080. What is the nominal yield to call?
a. 2.27 percent
b. 3.60 percent
c. 4,07 percent
d. 4.53 percent
2. Assume that Margie Perez wishes to purchase a 20 year bond with 14 years left to maturity that has a maturity value of $1,000 and makes semiannual interest payments of $30. If she requires a 10 percent nominal yield to maturity on this investment, what should be the price she is willing to pay for the bond?
a. $851,02
b. $776,53
c. $702.04
d. $441.61
Lohn Corporation is expected to pay the following dividends over the next four years: $14, $10, $9, and $4.50. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the stock is 10..
You’re trying to choose between two different investments, both of which have up-front costs of $100,000. Investment G returns $165,000 in 9 years. Investment H returns $285,000 in 16 years.
Consider a 30-year corporate bond paying 8 percent semi-annual coupon. The current yield to maturity is 10 percent. Find the approximate bond’s modified duration by using changes in the interest rate up and down by 5 basis points.
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A savings account, which started with a balance of $500, has the following end of year balances: Year 1 = $550; Year 2 = $580; Year 3 = $660; Year 4 = $772; Year 5 = $950. No withdrawals were made over the life of the account, but there was one addit..
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Jiminy's Cricket Farm issued a 30-year, 7 percent semi-annual bond 8 years ago. The bond currently sells for 87 percent of its face value. The book value of the debt issue is $25 million. The company's tax rate is 33 percent. What is your best estima..
By comparing a firm's liquidity ratios to a peer group's, manager can NOT gauge
Financial Analysts, Inc., is an investment firm that manages stock portfolios for a number of clients. A new client has requested that the firm handle an $800,000 portfolio. As an initial investment strategy, the client would like to restrict the por..
The principal-agent problem arises because _____ Buying bonds in a firm that has a high net worth is beneficial to the investor because _____. Governments regulate financial systems because _____
Briefly discuss the four levels of corporate responsibility using Carroll's Global Corporate Social Responsibility pyramid.
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