Explore BrainMass

Bond Valuation

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

Bonds Payable-Callable

Riley Co has an outstanding $40million face amount of 15% bonds that were issued on January 1. 1998 for $39,000,000. The 20 year bonds mature on December 31, 2017, and are callable at 102 (that is they can be paid off at any time by paying the bondholders 102% of face amount). Required. A) Under what circumstances would Ri

Transaction analysis for various transactions.

The attached file is an example. Transaction/Adjustment Current Assets Current Liabilities Long Term Debt Net Income Enter the transaction/adjustment letter in the first column, and show the effect, if any, of each of the transactions/adjustments on the appropiate balance sheet category or on the income statem

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

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?