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Bond Valuation

Finance problems: Bond valuation, NPV

Please help with the following finance-related problems. You are asked to appraise the bonds of Galardi & Griffin Corporation. The $1,000 par value bonds have a stated annual interest rate of 13 percent, and interest is paid semiannually. Based on current market conditions, the yield to maturity of the bonds is 12% per yea

What will be the initial dilution in earnings per share if the new stock is issued? What was the yield to maturity on the bond at the time of issue? If the firm distributes 40% of its earnings, what are its earnings?

1) The Tims Corporation expects earnings of $8,000,000 in the current year on 6,000,000 shares of common stock. The company is considering the effects on expected earnings of issuing an additional 2,000,000 shares of common stock. (a)  What will be the initial dilution in earnings per share if the new stock is issued? (b

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2. Which of the following statements is CORRECT? a. Yield curves must be either upward or downward slopingthey cannot first rise and then decline. b. If the pure expectations theory is correct, a downward sloping yield curve indicates that interest rates are expected to decline in the future. c. Downward sloping yield

Convertible bonds: YTM at issue and ROR

Please help with the following problem. A company issued $20 million of 15-year convertible bonds in October of 2003. At the time, market interest rates for straight bonds of similar quality were 6.4%. The company's convertible bonds had a coupon rate of 4% and sold for $1,120 when issued. The bond paid semi-annual interes

Continuous compounding, FV, multiple cash flows, stock valuation

10. Continuous Compounding Compute the future value of $1,000 continuously compounded for a. 5 years at a stated annual interest rate of 12 percent. b. 3 years at a stated annual interest rate of 10 percent. c. 10 years at a stated annual interest rate of 5 percent. d. 8 years at a stated annual interest rate of 7 percent.

Zero Coupon Bonds: Calculating Price, Interest, and Value

1) You purchased a zero-coupon bond that has a face value of $1,000, five years to maturity and a yield to maturity of 7.3%. It is one year later and similar bonds are offering a yield to maturity of 8.1%. You will sell the bond now. You have a tax rate of 40% on regular income and 15% on capital gains. Calculate the following f

Yield to Maturity and the Yield to Call

Please help with the given problem: It is now January 1, 2009, and you are considering the purchase of an outstanding RDC bond that was issued on January 1, 2007. The bond has a 9.5% annual coupon and a 30 year original maturity (it matures in December 31, 2036). There is a 5 year call protection (until December 31, 20011), a

Portfolio Valuation: Risk Free Rate, Market Premium and Yield

Portfolio Valuation You have inherited a portfolio of stocks and bonds from your favorite uncle. However, a codicil in the will requires you to be able to price the portfolio under different economic conditions before you can take possession of it. Come to think of it, this guy was never your favorite uncle. You can prove you

Dave & Marlene Coates Bond Investment: a short term trade or a swap

Dave and Marlene Coates live in the Boston Area, where Dave has a successful orthodontics practice. They have built up a sizable investment portfolio and have always had a major portion of their investment portfolio and have always had a major portion of their investments in fixed-income securities. They adhere to a fairly aggre


D. What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required return is 10%? e. (1) What is the value of a 13%coupon coupon bond that is otherwise identical to the bond described in Part d? Would you now have a discount or a premium bond? (2) What is the value of a 7% coupon bond with these

Calculate Yield to maturity (YTM) and Yield to Call (YTC)

B7. (Yield to maturity) Coca-Cola has a zero-coupon bond that will pay $1,000 at maturity in five years. Today the bond is selling for $790.09. What is the YTM? B8. (Yield to maturity) J.C. Penney has a zero-coupon bond that will pay $1,000 at maturity in 25 years. Today the bond is selling for $98.24. What is its Y

Calculates gain and loss based on spot price and future price

3) You manufacture gold jewellery for sale to local retail outlets. This upcoming spring you will require 500 troy ounces of gold and you would like to hedge your risk of price fluctuations through NYMEX. Today's (June) price of gold is US $393 per ounce. The settle price on a futures contract to buy gold in April is US $403

Valuation & Rates of Return

There is an attachment with 15 short problems attached. Please review the problems and assist with solutions as described. Must use Excel financial functions when possible. There is more than 1 tab. Thanks

Compute: The Weighted Average Cost of Capital

I need help figuring this out. The Accidental Petroleum Company is trying to determine its weighted average cost of capital for use in making a number of investment decisions. The firm's bonds were issued 6 years ago and have 14 years left until maturity. They carried an 8% coupon rate, and are currently selling for $962.50.

Bonds, price, financial manager, debt, PV

Question 6: Which of the following statements is CORRECT? A One disadvantage of zero coupon bonds is that the issuing firm cannot realize any tax savings from the debt until the bonds mature. B Other things held constant, a callable bond should have a lower yield to maturity than a noncallable bond. C Once a firm declar

What is the bond's yield to maturity?

You just purchased a bond that matures in 5 years. The bond has a face value of $1000 and has an 8% annual coupon. The bond has a current yield of 8.21%. What is the bond's yield to maturity?


Dear OTA, Please assist with the following questions. Thanks 1. Suppose the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium Industrial production (I) 7% Interest rates ( R) 3 Consumer confidence ( C) 5 The return on a par

Taxation: MC Question with explanation needed:

Which of the following statements is most correct and explain why? a. Indexing tax brackets reduces the extent of "bracket creep." b. Bonds issued by a municipality such as the city of Miami would carry a lower interest rate than bonds with the same risk and maturity issued by a private corporation such as Florida Power & L

Price a sequence of zero rates

Suppose you have the price a sequence of zero rates Maturity (Yrs) Zero rates (Continuous compounding) 0.5 5.20% 1 5.30% 1.5 5.30% 2 5.45% (a) If convert Zero rates to compound 12 times per annual, what is their value? (b) What is the zero rate for year 2.5 if a bond has coupon rate=9%,

Corporate Finance and Cost of Capital

Helpful tip: The text is "Corporate Finance" 8th edition, Ross. Westerfield. Jaffe All calculations must be shown. For problems that have an Excel template, be sure to download the template from the publisher's web site, and save as an Excel file. Chapter 9: Problem 25 (template is available) Chapter 10: Problem 4 (template

Bond Valuations

Assume that you can buy a bond for $555 today. The bond will pay you $75 in annual coupon payments (i.e. interest payments) at the end of each of the next 12 years, plus repay the original $1000 par value of the bond at the end of the 12th year. What annual rate of return would you expect to earn on the investment (i.e., wha

Bond Transactions Long Term Bonds

On April 1, 2007, the Diamond Bottle Company sold $400,000 of long term bonds for $331,180. The bonds will mature in 10 years and have a stated interest rate of 9% and an effective yield rate of 12%. The bonds pay interest semi-annually on September 30 and March 31 of each year. The bonds are to be accounted for under the eff

Stocks, Equity and Rate of Return

1.) Twister Corporation is expected to pay a dividend of $7 per share one year from now on its common stock, which has a current market price of $143. Twister's dividends are expected to grow at 13%. a) Calculate the cost of the company's retained earnings. b) If the flotation cost per share of new common stock is

Finance Problems

Need help with these finance problems. Please show me each step on how you got the answer. Do not show me just the answers. I need each step worked out. Question 1: (Interest Rates) a. Assume the following conditions prevail in the economy at this time: Real rate of interest.......................2% Expected infl