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Bonds

Current Price of bonds

Consider a bond with a 7% annual coupon and a face value of $1000. Complete the following table Year to Maturity Yield to Maturity Current Price 3 5 ? 3 7 ? 6

Sam McKenzie is the founder and CEO of McKenzie Restaurants, Inc., a regional company. Sam is considering opening several new restaurants. Sally Thorton, the company's CFO, has been put in charge of the capital budgeting analysis. She has examined the potential for the company's expansion and determined that the success of the new restaurants will depend critically on the state of the economy next year and over the next few years.

Sam McKenzie is the founder and CEO of McKenzie Restaurants, Inc., a regional company. Sam is considering opening several new restaurants. Sally Thorton, the company's CFO, has been put in charge of the capital budgeting analysis. She has examined the potential for the company's expansion and determined that the success of the

What is the maximum price you should be willing to pay for the bond?

Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Balance Sheet

Please see the attached file. I need to really understand this balance sheet because I'm going to take a text. Can you please explain to me more clearly how the additional information was used to create the Balance Sheet? Are 8 additional points, can you use different colors for each explanation point

Right to repurchase a debt issue

Corporations typically have the right to repurchase a debt issue prior to maturity at a fixed price, but only after some number of years have passed. Such debt is said to feature: a. a sinking fund. b. a balloon payment. c. a redeemable-at-par provision. d. a deferred call.

Calculating total real return on the investment in bonds.

Calculating Investment Return You bought one of Bergen Manufacturing Co.'s 8% coupon bonds one year ago for $1,028.50. These bonds make annual payments and mature six years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 7%. If the inflation rate was 4.8% over the past year, what

Currencies: Real interest rate, effective return

1.) Suppose the nominal interest rate in the US is 7.5% and US inflation is 3.5%. Also the Canadian dollar spot rate is 0.8574 and the Japanese yen spot rate is 0.00688. Finally, the 90-day forward rate for the Canadian dollar is 0.8493 and for the Japanese yen is 0.00700. If we assume the Fisher equation, interest rate parity,

Define benefit and cost externalities.

2. Define benefit and cost externalities. Explain why situations involving benefit externalities tend to result in an underallocation of society's scarce resources, and why situations involving cost externalities tend to result in an overallocation of society's scarce resources. 12. The Learned Book Company has a choice of p

Convertible bond and rates of return

Laser Electronics Co. has $30 million in 8% convertible bonds outstanding. Conversion rate is 50; the stock price is $17; and the bond matures in 15 years. The bonds are currently selling at a conversion premium of $60 over their conversion value. If the price of the common stockrises to $23 on this date next yesr, what would

Present value of a bond

Write the equation which expresses the present value (or price) of a bond that has an 8% coupon (annual payments), a 4-year maturity, and a principal of $1,000, if yields on similar securities are 10%

Interest payments to the US Debt

What does the interest paid each year on the US debt mean? Compare this feature to that of a household and a hypothetical household's debt load?

Price a bond should sell at

A bond recently issued matures in 15yrs. They have a par value of $1000 and an annual coupon of 6%. If the current market interest rate is 8% at what price should the bonds sell? I have tried using Excel and the numbers don't make sense when I put them into the formula.

Finance Questions

These are a few questions I did not quite understand. Would you please assist? * If a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be CORRECT? (Points: 10) The lower the company's TIE ratio, other things held constant, the lower the inter

Clark Company - Bank Reconciliation

Resource: Fundamental Accounting Principles Problem 8-4A including the Analysis Component Use the spreadsheet, Appendix B, to complete problem 8-4A. Use the tabs labeled SP08-04A and Given P08-04A The following information is available to reconcile Clark Company's book balance of cash with its bank statement cash balan

Hannon Home Products, Inc., recently issued $430,000

Hannon Home Products, Inc., recently issued $430,000 worth of 8 percent convertible debentures. Each convertible bond has a face value of $1,000. Each convertible bond can be converted into 28 shares of the firm's common stock anytime before maturity.The current price of Hannon's common stock is $31.25 per share, and the mar

Multiple choices

Dear Tutor, I don't trust myself so I would like to get a second opinion on these. Please answer the multiple choice questions and show any work you needed to do to obtain a given answer, if needed. Thank you ____ 1. Which of the following could explain why a business might choose to organize as a corporation rather

Multiple Choice - Finance

1. The primary objective of business financial management is to a. maximize total corporate profit. b. maximize net income. c. minimize the chance of losses. d. maximize shareholder wealth (i.e. stock price). 2. Theoretically, stock price is not directly d

Computing Steps

Problem: The balance sheets of Hutter Amalgamated are shown below. If the 12/31/2005 value of operations is $756 million, what is the 12/31/2005 value of equity? [ANSWER: $416 MILLION] * [Please show the computing steps by which the answer to this problem was derived]. Balance Sheets, December 31, 2005 (Millions

Optimal Portfolio Decisions

The James Bond Fund is a mutual fund (open-end investment company) with an objective of maximizing income from a widely diversified corporate bond portfolio. The fund has a policy of remaining invested largely in a diversified portfolio of investment-grade bonds. Investment-grade bonds have high investment quality and receive a

What drives bond prices?

1. Do normal demand/supply fluctuations move bond prices? 2. Or is it based on changes in the required yield (which is factored into the bond calculation, thus changing the prices) If it's based on 1. then to changes in required yield force people to buy and sell? What market forces change the required yield? Is this based

Securities, bonds, preferred stock

1. True / False _______ Correlation is a measure of relationship between two securities. _______ Standard Deviation is calculated by taking the future values of present values. _______ A beta of 1.8 is less risky than the market. _______ Australia uses the Euro as their currency. _______ It's always

Economics Questions

1. What is the Future Value at the end of 17 years of depositing $1,750 into a Mutual Fund today, assuming the fund is expected to earn 12% a year? 2. You are considering the purchase of a bond with a semiannual coupon of $40, Ten years to maturity, a face value of $1,000, and a current market price of $1,000. a. A

Prepare entries for issuance of bonds

Hurley Company issued $400,000, 11%, 10-year bonds on January 1, 2006, for $424,925. This price resulted in an effective interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Hurly uses the effective interest method to amortize bond premium or discount. Instructions: Prepare the jou