Which instrument will you prefer and why

Assignment Help Financial Management

Reference no: EM131448921

You can buy one bond today (Dec 31, 2016) issued by XYZ Inc with face value of $1000 and a coupon rate 8% payable quarterly and maturing on Dec 31, 2021. You want a Yield-toMaturity of 10 % and can buy this bond now for $880. You can also buy a share of this company today for $130, the company promises a dividend payment of $5 each quarter for next five years. Your educated guess is that the price will appreciate to $140 in five years and you want to use a discount rate of 10%. Which instrument will you prefer and why?

Reference no: EM131448921

Questions Cloud

Behaviours and performance within the virgin group : Define the characteristics of a group and identify how these align to group behaviours and performance within the Virgin group of companies.

Influence the effectiveness of groups : Discuss how the various roles and stage of development are apparent and influence outcomes within the Virgin group of companies.

Calculation behind the social security and medicare taxes : Briefly describe the reason and calculation behind the Social security and Medicare taxes you might see in your annual W2?

What is the firms roe : Orange Electronics Inc. has a profitability ratio of 0.14, a debt to equity ratio of 0.60 and a total asset to equity ratio of 1.60. What is the firm's ROE?

Which instrument will you prefer and why : Your educated guess is that the price will appreciate to $140 in five years and you want to use a discount rate of 10%. Which instrument will you prefer and why

Common reasons for crashing a project : 1) What are the five common reasons for crashing a project?

Affecting the communication process : How are electronic communication devices (cell phones, e-mail, and websites including social media) affecting the communication process?

Determine appropriate sampling methodologies for business : Primary Task Response: Within the Discussion Board area, write 400-600 words that respond to the following questions with your thoughts, ideas, and comments.

Preparing to move your business from new jersey : Consider that you are a large organization and you are preparing to move your business from New Jersey to Arizona in 12 months.

User Account

All Pages