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A corporate bond with a 7.550 percent coupon has fourteen years left to maturity. It has had a credit rating of BB and a yield to maturity of 9.8 percent. The firm has recently become more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 8.7 percent
What will be the change in the bond’s price in dollars? (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
What will be the change in the percentage terms? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Roy Gross is considering an investment that pays 6.10 percent, compounded annually. How much will he have to invest today so that the investment will be worth $28,000 in six years?
You owe $2,000 on your credit card. The interest rate they offer is 19.6% interest compounded monthly. If you can only make the minimum monthly payment of $40 per month, how many years will it take for you to be debt-free?
An insurance company’s losses of a particular type per year are to a reasonable approximation normally distributed with a mean of $150 million and a standard deviation of $50 million. (Assume that the risks taken on by the insurance company are entir..
Debt financing is more risky for firms than preferred stock financing because
Data on Wentz Inc. for 2008 are shown below, along with the payables deferral period (PDP) for the firms against which it benchmarks. The firm's new CFO believes that the company could delay payments enough to increase its PDP to the benchmarks' aver..
Grant Inc., is a well known U.S firm that needs to borrow 10 million British pounds to support a new business in the United Kingdom. However, it cannot obtain financing from te British banks beacuse it is not yet established within the United Kingdom..
A Navy petty officer needs cash and goes to a paycheck advance company for some money. He/she agrees to pay $560 in two weeks (when his/her paycheck arrives) in exchange for $500 today. What is the interest rate implicit in this loan? Hint: This is a..
Two bonds have a coupon rate of 6.5 percent, semi-annual payments, face values of $1,000, and yields to maturity of 7.1 percent. Bond S matures in 6 years and bond L matures in 12 years. What is the difference in the current prices of these bonds?
Mandesa, Inc., has current liabilities of $8 million, current ratio of 2 times, inventory turnover of 12 times, average collection period of 30 days, and credit sales of $64 million. Calculate the value of cash and marketable securities.
Find the duration of a 7% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 6.4%. What is the duration if the yield to maturity is 10.4%? (Do not round intermediate calculations. Round your answ..
Treasury bills are currently paying 9 percent and the inflation rate is 3.1 percent. What is the approximate real rate of interest? What is the exact real rate?
Use the formula for continuous compounding A = Pert, where A is the account balance after t years for the principal P and annual interest rate r (in decimal form). A deposit of $7000 is placed in a savings account for 2 years. The interest is compoun..
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