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Bond Valuation

Is Dallas Instruments in compliance with bond covenants?

Dallas Instruments has a large bond issue whose covenants require: (1) that DI's interest coverage ratio exceeds 4.0; (2) that DI's ratio of tangible assets to longterm debt exceeds 1.50; and (3) that cumulative dividends and share repurchases not exceed 60% of cumulative earnings since the date of the issuance of the bo

Issue price for Zeros, amortized interest deduction Tesla

Telsa Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 25-year zero coupon vonds to raise the money. The required return on the bonds will be 9 percent. A. What will these bonds sell for at issuance? b. Using IRA amortization rul, what interest deduction can the company take on the

YTM & Yield to Call

A 10year 12% semiannual coupon bond with a par value of $1000 may be called with a call premium of $60. The bond is currently selling for $1100. What is the bonds' yield to maturity? What is the bonds' yield to call?

Using Present Value Analysis Estimates

1. Using present value analysis estimate the number of zero coupon bonds(each with a face value of $1000) that will have to be offered to provide the $1 million Laurinburg Precision Engineering needs for expansion, if investors seek a yield of 10%. Assume interest will compound on a semiannual basis over the life of the five yea

Statistics and International Finance

Statistics 1. The general form of the multiple regression equation is the following: y = a + b1x1 + b2x2 + b3x3 + ..... + bnxn "a" is the intercept value defined as the value of y (dependent variable) if all independent variables are equal to zero "b1" is the sensitivity of y to variable x1. If x1 is varied by 1 unit, y

Yield to Maturity

Using a Spreadsheet to Calculate Yield to Maturity. What is the yield to maturity on the following bonds; all have a maturity of 10 years, a face value of $1,000, and a coupon rate of 9 percent (paid semi-annually). The bonds' current market values are $945.50, $987.50, $1,090.00, and $1,225.875, respectively. Market Value To

Corporate Finance: Value of the Stock

See the attached file. 7.11- Assume that the average firm in your company's industry is expected to grow at a constant rate of 6% and its dividend yield is 7%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work which leads you to expect that its earnings an

Tax law for real estate: Property held or used, vacation home rules

Admit it. You've watched that late-night infomercial describing how you can become a multimillionaire virtually overnight by leveraging your good looks and sparkling personality (and little else...) to invest in real estate. All joking aside, investing in real estate does present some opportunity for the creation of wealth, much

Zero-Coupon Bond Prices

A 2-year $1,000 par zero-coupon bond is currently priced at $819.00. A 2-year $1,000 annuity is currently priced at $1,712.52. Assume: a. the pure expectations theory of interest rates holds, b. neither bond has any default risk, maturity premium, or liquidity premium, and c. you can purchase partial bonds. If you want to invest

business finance current prices

i) Find the current price of 30 day commercial paper issued with a yield of 1.25% and with face value of $100,000. ii) Danny purchases a newly issued 4 year bond priced at $1015 with par value of $1000. It pays $100 interest yearly. What is the coupon rate, the current yield and the yield to maturity? iii) Danny also p

Bonds: Value, YTM, YTC, PV, market price, current yield, capital gain yield

Please calculate the attached problems and show all work: 1. Bond PV 1a A coupon bond promises annual interest payments based on a face value of $1,000 and a 9.00% coupon rate. The bond matures in 22 years. If the appropriate discount rate is 7.85%, what is the value of the bond? 2. Bond YTM 1a A coupon bond with annual

Market Size of the NYSE and Bond Market

Which market is bigger in terms of dollars of securities transacted annually: the NYSE or the bond market? How did you find your answer? Please share your source and your reaction. Did you expect the answer you found?

Bond Refunding Analysis for Mullet Technologies

Mullet Technologies is considering whether or not to refund a $75 million, 12% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $5 million of flotation costs on the 12% bonds over the issue's 30-year life. Muttlet's investment banks have indicated that the company could sell a new 25-year issue at an inte

High-Yield Securities and Risk for Stephanie

Stephanie is an investor who is willing and able to bear substantial risk in order to earn a higher return. As her financial planner, you believe that high-yield debt instruments would be an attractive alternative to stocks, whose prices have risen recently. High-yield securities offer larger returns but may involve substantial

Price of bonds, YTM, Current yield, portfolio's beta, return on stock

Practice Questions (5-1) Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds? (5-2) Wilson Wonder's bonds have 12 years remai

Bond Pricing

The current coupon rate, yield to maturity, and market price for the 10-year US Treasury bond are 2.625%, 3.33% and 94-02 respectively. Note, the price is expressed as a percentage of par (like other bonds) but the number after the dash represents 32nds of a percent. In other words, this bond is selling for 94 plus 2/32nds of a

Valuation, Interest rates, Constant growth, Preferred stock value

See attached file for proper formatting. Questions: (5-2) "Short-term interest rates are more volatile than long-term interest rates, so short-term bond prices are more sensitive to interest rate changes than are long-term bond prices." Is this statement true or false? Explain. (5-3) The rate of return you would get i

Core deposits, bond values, yield, asset utiliization, ROE, ROA

I need a starting point on how to approach these questions. 1). How do core deposits differ from purchased funds 2). A bank is considering two securities: a 30-year Treasury bond yielding 5 percent. If the bank's tax rate is 30 percent, which bond offers the higher tax equivalent yield 3). A bank is considering an inve

Revision of the Equity Portfolio

Consider the information in the following table: a. What is the beta of this portfolio? b. What (specifically) would you do to bring this portfolio back to a target beta of 1.10? And also the following A seven-year bond with an 8 percent coupon rate has a yield to maturity of 9.15 percent. What is the current bond p

Value of vinyl records today

Please help with the following problems. 1) Joe has agreed to sell his entire collection of vinyl records to a museum in three years at a price of $100,000. The current risk free rate is 7%. What is the value of the collection today? 2) Elder Toys has issued $1,000,000 bond with a par value of $1,000, coupon rate of 8%,

Current Yield vs Yield to Maturity

Explain the difference of a bond's Current Yield and its Yield to Maturity. Why would these measures be important to a bond investor? Find the Current Yield and the Yield to Maturity of a 20 year, nine percent coupon, $1000 par value bond currently trading in the market at $850.

Bond: Calculate current price, yield, YTM, call

A bond has the following terms: Annual interest $100 Term 15 years Principal $1,000 a. What is the current price of the bond if comparable yields are 7 percent? b. What are the current yield and yield to maturity given the price of the bond in the previous question? c. If you expect the b

Finance: 30 multiple choice questions

1. A company has a current ratio of 1.8, a net income of 180,000, a profit margin of 10% and an accounts receivable balance of 150,000. What is the firm's average collection period? A. 24 days B. 30 days C. 43 days D. 50 days 2. Balance sheets Income statement Assets

Finance: Bond valuation...

Bond Valuation a. Calculate the Yield-to-Maturity on a 8 year, 9 percent semi-annual coupon, $1,000 par value bond that sells for $921.11 What is the YTM if that bond now sells for $1,157.67? b. What is the total return, the current yield, and capital gains yield for the DISCOUNT bond (i.e. $921.11)? (Assume the bond is h

Calculate which bond Lynn should purchase and why

Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 11% coupon interest rates and pay annual interest. Bond A has exactly 5 years to maturity, and bond B has 15 years to maturity. a. Calculate the value of bond A if the required return is (1) 8%, (2) 11%, and (3)

Calculate bond price, current yield, YTM, discount vs premium

Assume that the Financial Management Corporation's $1,000-par-value bond had a 5.700% coupon, matured on May 15, 2017, had a current price quote of 97.708, and had a yield to maturity (YTM) of 6.034%. Given this information, answer the following questions. a. What was the dollar price of the bond? b. What is the bond's curr