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Please show calculations and walk through the process to obtain a solution. 1} A 10-year Corporate bond is issued with a face value of $100,000, paying interest of $2,500 semi-annually. If market yields decrease shortly after the T-bond is issued, what happens to the bond's: a. price?

4 problems

1. Ginko Inc. has bonds outstanding that mature in 20 years. The bonds have $1000 par value, pay interest annually at a rate of 10 percent, and have a current selling price of $875.25. What is the yield to maturity? 2. A share of common stock just paid a dividend of $3.25 per share. The expected long-run growth rate for th

Multiple choice

MULTIPLE CHOICE: 1. Money functions as: a. store of value b. unit of account c. medium of exchange d. all of the above 2. In the United States the M1 money supply is comprised of: a. coins, paper currency, and checkable deposits. b. currency, checkable deposits, and government bonds. c. coins, paper currency, checka

Capital or not

1) Which of the following are capital and which are not. Explain a) video poker game machine at a local bar that takes quarters. b) a $10 bill c) A college education d) The Golden Gate Bridge. e) The shirts on the rack at Sears. f) A government bond. g) The Empire State Buliding. h) A savings account

Foreign investment

What happens when a country such as Japan dumps American Bonds? What happens to the exchange rate? What happens to the money supply? What happens to the bond prices and yields/interest rates? thanks!

Description of The Federal Reserve

In principle could the Federal Reserve conduct monetary policy through the purchase and sale of stocks on the New York Stock Exchange? Do you see any possible drawbacks to such a policy. Suppose the Federal Reserve purchased gold or foreign currency. How would this purchase affect the domestic money supply?

Fed Funds rate, 10 Year T-bill, Mortgage Rate relationship

What is the relationship between the Fed funds rate, the 10 year (US) T-bill and the Mortgage rate? If the fed funds rate goes up, what exactly is affected? I know it's very short term investments, but what exactly? is it credit card rates? (examples please) Then, what is expected to happen to the 10 Year T-bill? Why?

Contemporary Economics

Contemporary Economics 1. Tuition at Matchbook Cover Tech was $9,000 per semester and enrollment was 5,500 in 1995. By 2005, tuition had fallen to $6,000 and enrollment to 2,800. Does this mean that the demand curve for education at Matchbook Cover Tech is positively sloped with regard to price (i.e., that the own price c

Basic Macroeconomics question

In the context of a closed economy IS-LM model; (a) Under what circumstances would the following have no effect of the level of output? i. An increase in government spending. ii. An open market purchase of bonds, from the public. (b) Under what circumstances would the following have no effect on the rate of interes

Foreign Exchange

Consider a 1-year riskless Canadian bond and a 1-year riskless Japanese bonds. The interest rates on the Canadian bond and the Japanese bond are denoted by iCADt and iYent, respectively. The current spot rate is EYen/CADt, and the forward rate is FYen/CADt. The investors' expected spot rate in 1 year is Ee Yen/CADt+1. Assume t

Corporate Finance

Quest 1: a) Is it possible to increase return and decrease risk of a portfolio at the same time? b) Why do investors buy common stocks instead of investing all their money in bonds and t bills. Question 2: Use the attached table table to answer - A) If the investor allocates 30% of his money to Scott Corp. and the

Corporate Finance: WACC, Beta, cost of equity using CAPM

Question 1: The AI corporation has a $150 M worth of common stock on which investors require a 17% rate of return. It also has $35 M in bonds that offer a 7% return. a) Compute the WACC assuming that AI is subject to a 40% tax rate. b) Re-compute the WACC assuming that the firm has $85 M in debt and $100 M in stock. c

Corporate Finance: Discount Rate; IRR; NPV

Question 1 A company is considering a project that produces the attached cash flows. Assume that the appropriate discount rate for this project is 8%. a) Compute the IRR of this project. b) Compute the NPV of this project. c) To select a project would you use IRR or NPV? Explain. d) What is the economic interpre

Issue price of bonds and journal entries

Minimus sold a 100,000 9% 3 year bond issue due on march 31 year 1 at a price yield to investors 10%. Interest rates are per annum compounded semi-annually. The bond interest is payable each september 30 and march 31, with the first payment due september 30 year 1. Premium or discount is amortized by straight line method. Ye


You are a fixed income fund manager based in UK. A Hungarian government bond paying annual 8.5% coupon with one year remaining life is trading at 99.55. Spot rate of HUF/GBP is 350.72, one year forward HUF/GBP is 356.35. Calculate the fully hedged return if you invest in this bond.

Bond calcuations

A 3yr bond, annual coupon 3.5%, yield 3.8%, last coupon payment just made. Calculate its price and current yield?

Private activitiy bonds restriction by the state

Part 1. Does restricting "private-activity" bonds, the solution set forth by the Federal tax reform act of 1986, make sense if applied by the state on local governments? What are the arguments for state restriction of these bonds? Part 2. Do the arguments for restricting these private activity bonds by the state on local gov

Important information about Bond Pricing

A General Motors bond carries a coupon rate of 8 percent, has 9 years until maturity, and sells at a yield to maturity of 7 percent a) What interest payments do bondholders receive each year? b) At what price does the bond sell? (Assume annual interest payments.) c) What will happen to the bond price if the yield to maturit

Bond Values and Stock Prices

Part a Assume you hold a corporate bond with a $1,000 par value paying a 7 ⅝ coupon rate that has two years left until maturity. Calculate the value of the bond if the current market interest rate on a bond of this risk is 9 %. Part b Assume that you hold a share of common stock that will pay a dividend of $5.00

Negotiated basis vs competing bid

Some of the empirical research suggests that the net interest cost to issuers is likely to be somewhat higher when a new issue is sold on a negotiated basis (the negotiations being with a single team of underwriters) than on the basis of competing bids from a number of underwriting syndicates. If this is often true, under what c

Describe refunding and municipal bonds/tax exempt bonds

The single most important reason for the large volume of new issues of tax-exempt bonds during the 1990s has been the refunding of outstanding bonds. What facts does an issuer need and which variables must the issuer (or its financial advisor) forecast, in order to decide whether a proposed refunding is the right course of actio

Bond overview

Suppose you have a coupon bond with a coupon rate 4.5%, face value of $1000 and the bond has 3 years to maturityfrom now. what is the yield to maturity if you purchased the bond for $1000? and what would the price be if the yield to maturity was 10%?


If the price of a bond is higher than its face value yould yield to maturity be higher or lower than the coupon rate in theory? what do we see in the real world?

Finance - Bonds and their Valuation/2466

I have an excel spreadsheet with 2 question on it. They relate to the valuation of bonds. I have provided the answers, however I am not sure how the answers were derived. I need to know the formula used in Excel to arrive at these answers - or - the steps performed on the HP12C Financial Calculator to arrive at these answers. I