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Bond Valuation

Types of gains and losses; bonds; other

1) Nickel Inc. owns $400,000 of 10-year, 9% bonds as an investment on December 31, 2010. The bonds have 3 years remaining to maturity. The unamortized premium remaining on these bonds was $36,000. Nickel uses straight-line amortization. On May 1, 2011, $80,000 of the bonds were redeemed at 115. How much, and what type of gai

Coupon rate

Its investment bankers have told Donner Corporation that it can issue a 25-year, 8.1% annual payment bond at par. They also stated that the company can sell an issue of annual payment preferred stock to corporate investors who are in the 40% tax bracket. The corporate investors require an after-tax return on the preferred that e

Price per Face Value of Two Year Zero Coupon, Risk Free Bond

Suppose the current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 5 _________________________ YTM 5.00 5.50 5.75 5.95 6.05 a)What is the price per$100 face value of a two year,zero-coupon,risk-free bond? b) What is the price per $100 face value

6 monts bond-maturity, coupon rate and face value calculation

Assume that a bond will make payments every six months as shown on the following timeline ( using six- months period): 0 1 2 3........20 _________________ 20 20 20 20+1000 a) What is the maturity of the bond (in years)? b) What is the coupon rate (in percent)? c) What is the face value?

EBITA/WACC/annual rate of return

You are employed by Wal-Mart Stores, a Fortune 500 firm. You are on the corporate staff as an assistant to the CFO. This is a position with high visibility and the opportunity for rapid advancement, providing you make the right decisions. Your boss has asked you to estimate the weighted average cost of capital for the company.

Bond Valuation of Maturity for Cash Flows

IBM 8% due in 5 years Assume $1,000 Par or face amount Assume exactly 5 years to maturity Cash Flows: 0 $0 1 $40 2 $40 3 $40 4 $40 5 $40 6 $40 7 $40 8 $40 9 $40 10 $1,040

Bond - precentage change

Consider an American bond with an effective duration (which is pretty much the same as modified duration, but more precise) of 6.76 years having a yield to maturity of 7% and interest rates are expected to rise by 50 basis points. What is the percentage change in the price of the bond?

Bond Analysis: Muni Bond Yield

At what point would an investor be indifferent between a corporate bond yielding 10.8 percent and a tax-free municipal bond of equal financial strength if the investor's marginal tax rate is 25 percent? (i.e. what would the yield be on the muni bond at the point where the investor is indifferent between the muni and the coopera

Bond for Portfolio Managers

You are a bond portfolio manager who expects interest rates to decline by 1% over the next year. You are required to mark your portfolio to market each quarter, and measured on your resulting performance. Which of the following two bonds would you prefer to hold? WHY have you made this choice? (no calculations, just words an

Yield to Maturity: Compute price of zero coupon bonds

a. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating? b. What is the credit spread on AAA-rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? The following

Bond Valuation: Financial Statement Analysis

Question 1: (Financial Statement Analysis) Consider the following set of financial statements (attached): a. What is the company's average annual rate of sales growth from 2008 through 2010? b. How long, on average, was Better Mouse Trap taking to collect on its receivable accounts in 2010? (Assume all of the company

10-3 Amoritzation of Premium on Bonds for Stacy Company

Stacy Company issued five year, 10% bond with a face value of 10,000 on Janurary 1,2008. Interest is paid annually on December 31st. The market rate of interest on this date is 8% and Stacy Company receives proceeds of 10,803 on bond insurance. 1. Prepare a five year table to amortize the premium using the effective interest

Earning a return; price of bond; estimated per-share price

1) As an investment analyst, you are typing to determine the probability of different returns on Omega Corporation's common stock. As a first step you will determine Omega's required rate of return. The 10-year Treasury bond rate is 4%. The market risk premium is 5% and Omega's beta is 1.4. You have already completed calculation

Calculating current market value

I am trying to calculate the market value of debt and equity.I am given Common stock: $735. million shares outstanding $27.50 cost per share Total stockholders equity of $350 million bond 1 $625 million total face value selling 98% of face value bond 2 $200 million total face value selling for $975 per bond

finance questions

Chapter 6 43.) Present and Future Values. The present value of the following cash flow stream is $6,550 when discounted at 10 percent annually. What is the value of the missing cash flow? Year Cash Flow 1 $1,700 2 ? 3 $2,100 4 $2,800 Chapter 7 9.) Calculating Real Rates of Return. If treasury bill

Bond interest of 8 percent

An 8-percent--coupon bond sells for $800 and matures in seven years. Calculate its yield to maturity, assuming the following: a. The bond pays a single annual interest payment. b. The bond pays interest semiannually.

Calculating the approximate yield for a callable bond

Assume you have purchased a 25 year, 9%, $1000 par callable bond with 19 years remaining until maturity and 4 years until the first call. If the call price is equal to par plus one year's interest and the market price is $1,050, what is the appropriate approximate yield, assuming annual interest payments? Please show steps.

Approximating the Realized Yield of a Bond

Suppose you have a bond that pays a 6% coupon, matures in 15 years and has a current price of $850. If you expect to sell it in 5 years at $950, what is your approximate realized yield? (For simplicity, assume an annual convention, and a $1,000 par value bond) Please show steps.

Bonds and Their Valuation; Features of Preferred Stock

1. A 10-year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT: a. The bond's current yield is less than 8%. b. If the yield to maturity remains at 8%, then the bond's price will decline over the next year. c. The bond's coupon rate is less t

After-Tax Cost of Financing

.Drywall Systems, Inc., is presently in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the company that different maturities will carry different coupon rates and sell at different prices. Drywall Systems must choose among several alternatives. In each case, the bo

ADJUSTING AND RECLASSIFYING ENTIRES

1. Office supplies have a balance of $2,400. An inventory at 12/31 shows $1,700 of supplies on hand. 2. There are two insurance accounts in the trial balance, prepaid insurance-$9,200 and Insurance Expense $2,800. Unexpired insurance at the statement date is $3,000. 3. All rent receipts ($25,000) were credited to rent income

Macaulay Duration Bond

Compute based on the following, consider the following: 1. Bond w/5 yr term to mature, 12% coupon (annual), market yield 10%. 2. Bond w/4 yr term to mature, 12% coupon (annual), market yield 10%. 3. Compare answers for 1 & 2, discuss implications of this for classical immunization. Show work.

Long, Short and Cross Hedges

See the attached file. SQ 9-9. Define and explain the use of the following: (a) long hedge; (b) short hedge; and (c) cross hedge. SQ 9-10. Which type of hedge named above works best in an environment of rising interest rates? Of falling interest rates? Illustrate both cases using a payoff diagram. SQ 9-11. What is the ba

Equity cost of capital: Trading price of bond

The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semi-annually. Assuming the appropriate YTM on the Sisyphean bond is 7.5%, then at what price s

Semiannual bond

The Florida investment Fund buys 90 bonds of the Gator Corp. through a broker. The bonds pay 8% annual interest. The yield to maturity is 10%. The bonds have a 25 year maturity Using an assumption of semiannual interest payments: a. Compute the price of a bond .Need to calculate payments for interest then principle.

Bonds What will be the amount of interest paid in nominal do

3. A four year TIPS bond promise a real annual coupon return of 4 percent, and the face value is $1,000. The annual inflation rate was zero at the time it was issued; the inflation rate is now 3% and is expected to remain at this level for the four year term. What will be the amount of interest paid in nominal dollars each