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Bond Valuation

Financial Markets and Stocks and Bond Quotations: 4 MCQ

Please see attached file. 2. An investor bought 100 shares of Venus Corporation common stock 1 year ago for $40 per share. She just sold the shares for $44 each, and during the year, she received four quarterly dividend checks for $40 each. She expects the price of the Venus shares to fall to about $38 over the next year.

What is the call price on the bonds?

Kennedy Gas Works has bonds which mature in 10 years, and have a face value of $1,000. The bonds have a 10 percent quarterly coupon (i.e., the nominal coupon rate is 10 percent). The bonds may be called in five years. The bonds have a nominal yield to maturity of 8 percent and a yield to call of 7.5 percent. What is the call pri

Impact of Discount and Premium

Impact of a Discount Berol Corporation sold 20-year bonds on January 1, 2008. The face value of the bonds was $100,000; and they carry a 9% stated rate of interest, which is paid on December 31 of every year. Berol received $91,526 in return for the issuance of the bonds when the market rate was 10%. Any premium or discount i

XYZ's seven-year $1,000 par bonds. What is expected rate of return?

The XYZ's seven-year $1,000 par bonds pay 9 percent interest. Your required rate of return is 7%. The current market value for the bond is $1,100. i. Determine the expected rate of return ii. What is the value of the bonds to you given your required rate of return? iii. Should you purchase the bond at the current market p

Bond Yield: An investor must choose between two bonds.

An investor must choose between two bonds: Bond A pays $80 annual interest and has a market value of $800. It has 10 years to maturity. Bond B pays $85 annual interest and has a market value of $900. it has two years to maturity. a. Compute the current yield on both bonds. b. Which bond should be select based on your answer

Multiple Choice Questions: listing on a stock exchange, issuing securities, book value per share, after-tax cost of debt, Operating leases, financial lease, off-balance sheet lease financing, lease vs buy, conversion value of the bond, conversion price, before-tax yields, net advantage to leasing

1. Which of the following statements about listing on a stock exchange is most correct? a. Listing is a decision of more significance to a firm than going public. b. Any firm can be listed on the NYSE as long as it pays the listing fee. c. Listing provides a company with some "free" advertising, and status as a listed c

Bond Valuation

Two years ago, you acquired a 10-year zero coupon, $1000 par value bond at a 12 percent YTM. Recently you sold this bond at an 8 percent YTM. Using semiannual compounding, compute the annualized horizon return for this investment.

Bond Valuation: Calculate bond's modified duration

Calculate the duration of an 8 percent, $1,000 par bond that matures in the three years if the bond's YTM is 10 percent and interest is paid semi-annually. a) Calculate this bond's modified duration. b) Assuming the bond's YTM goes from 10 percent to 9.5 percent, calculate an estimate of the price change.

Bond Valuation: Yield to Maturity and Yield to Call

Assume that you purchased an 8 percent, 20 year, $1,000 par, semiannual payment bond priced at $1,012.50 when it has 12 years remaining until maturity. Compute: a) Its promised yield to maturity. b) Its yield to call if the bond is callable in the three years with an 8 percent premium.

Cost of debt question

The pretax cost of debt, the aftertax cost of debt, and determining the importance of pretax versus the aftertax cost of debt. Here's some background information: Previously, I issued a 30 year, 10% semiannual bond about 7 years ago. The bond is selling at 108% of the face value and the tax rate is 35% Thank you

The maturity value of a $15,000, 60-day, 5% note payable is

Following are some examples from a practice book that I have. I am kind of confused with the answers, if somebody could help me, I will really appreciate it. Thanks, 1. The maturity value of a $15,000, 60-day, 5% note payable is _______. $15,750 $750 $15,125 $125 2. The following tot

Gray House Bond Calculation

Gray House is issuing bonds paying $105 annually that will mature fifteen years from today. The bond is currently selling for $980. Calculate: (a) Coupon Rate (b) Current Yield (c) Yield To Maturity

Issuance of Bonds with Warrants

Illiad Inc. has decided to raise additional capital by issuing $170,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bo

Bonds-Logan Corporation

Logan Corporation issued $800,000 of 8% bonds on October 1, 2006, due on October 1, 2011. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yield 10% effective annual interest. Logan Corporation closes its books annually on December 31. Instructions

Issuance and Amoritization of Bonds

RST Company sold $9 million of four-year, 8% debentures on July 1, 2007. The bonds sold to yield a real rate of 7%. Interest is paid annually on June 30. A. Determine the price of the bonds. B. Prepare an amoritization schedule for the bonds. C. Record the entry to the accounting system that is necessary to recognize interest

Ch 8 Bond Calculations: problems 1, 2, 3, 5, 6, 8, & 11

Complete problems: 1, 2, 3, 5, 6, 8, & 11 on text pp. 274-276 of Ch. 8. 1. Determine the value of a $1,000 denomination Bell South bond with a 7 percent coupon rate maturing in 20 years for an investor whose required rate of return is: a. 8 percent b. 7 percent c. 5 percent 2. Consider Allied Signal Corporation's perc

Corporate bond

A corporate bond has a face value of $1,000, and pays a $50 coupon every six months (i.e., the bond has a 10 percent semiannual coupon). The bond matures in 12 years and sells at a price of $1,080. What is the bond's nominal yield to maturity

Category of Mutual Funds

1. What category of mutual fund invests in stocks and bonds issued by corporations that have a history of socially responsible actions? 2. What category of mutual fund invests in risk oriented common stocks of new companies that promise large returns? 3. What category of mutual fund divides their investments among stocks,

Finance: Net Present Value Measurements

11. The yield to maturity is: (Points: 3) the rate that equates the price of the bond with the discounted cash flows. the expected rate to be earned if held to maturity. the rate that is used to determine the market price of the bond. equal to the current yield for bonds priced at par.

4 problems: Stocks & Bonds for ABC Co, XYZ Co and Large Co

Problem 1 On January 1, 2002, the ABC Corpoartion purchased a six-year, 12% bond having a maturity value of $300,000. The bond was purchased at a market price of $288,000 and provides an effective interest rate of 13%. The bonds are dated January 1, 2002 and mature on January 1, 2008.

Bond Interest Payments, Price of a Bond and Yield to Maturity Question

Please help with the following problem. Provide step by step calculations. Assume it is early 2003 and the following bond quotations appeared in the Wall Street Journal: ConocoPhillips (COP) 5.900 Oct 15, 2032 95.972 6.200 90 30 88,510 Amerada Hess (AHC) 7.125 Mar 15, 2033 100.145 7.113 179 30 55,000 a. How much in an

Valuation of Bonds: price today, present value, yield

1. What is the price today of a 2-year 9% coupon bond that has a par value of $1,000 and a required rate of return of 9%? 2. You have invested in a bond that pays semiannual coupon payments of $40 and has a par value of $1,000. The bond matures in 1 year, and its required rate of return is 10% compounded semiannually. Determi

Financial Securities valuation - Bond Stock Valuation

Hi, I have questions for 2 problems , can somebody please help ? thanks Problem 1. Your uncle is interested in buying a certain stock, which he says is undervalued and should be worth $35 per share. He has asked for your help. The stock's dividend, currently at $1.10, is expected to increase at a rate of 5% per year forev