Question 23 Which of the following statements is CORRECT? Question 24 Which of the following bonds has the greatest interest rate price risk? Question 25 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? Question 26 Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as
Round your answer to 2 decimal places. (e.g., 32.16)) | Ngata Corp. issued 12-year bonds 2 years ago at a coupon rate of 9.6 percent. The bonds make semiannual payments. If these bonds currently sell for 99 percent of par value, what is the YTM? | | 8.78% | | 10.73% | | 11.71% | | 9.76% | | 4.88% | Redesigned Computers has 10 percent coupon bonds outstanding with a current market price of $910.00.
Problem 17-19 on Dividend Capture Strategy based on Chapter 17 Payout Policy Que Corporation pays a regular dividend of $1 per share. Typically, the stock price drops by $0.80 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 20%, but investors pay different tax rates on dividends. Absent transactions costs, what is the highest dividend tax rate of an investor who could gain from trading to capture the dividend? Problem 23-5 on Preferred Stock based on Chapter 23 Raising Equity Capital Three years ago,
Note also that the interest rate we must use is a simple discount rate. The data can be displayed on a time line. | | | | | $800,000 | | | | 0 | 39 | 123 | | $P | | | | | P | = | Price | = | unknown | | S | = | Face value | = | $800,000 | | d | = | Simple discount rate (decimal) | = | 4.7 | 100 | | = | 0.047 | | t | = | Time period (years) | = | 84 | 365 | | = | 0.23013699... years | | The step-by-step calculation is: P | = | S(1 - dt) | | | = | 800,000(1 - 0.047 x 0.23013699...) | | | = | 800,000 x 0.98918356... | | | = | $791,346.85 | Rounded as last step | c)This is not
In total it will be $74,295; since the investors paid $80,000 the yield rate is less than 8%. As for the correctness of the $748 first year bond discount amortization, the calculation follows: Since the bond proceeds were $80,000 and the true yield is 7.23% per year. 7.23% came from the interest table that I have. Then for Year 1 net interest should be $80,000*.0723 =$5784. But the stated interest payment is $5,000, thus the $784 interest expense is amortization of the bond discount.
Martinez uses the effective-interest method of amortizing bond premium. At the end of the first year, Martinez should report unamortized bond premium of: 1. Question: : (TCO C) Sisco Co. purchased a patent from Thornton Co. for $180,000 on July 1, 2007. Sisco amortizes the patent over a period of 10 years. Expenditures of $92,000 for successful litigation in defense of the patent were paid on July 1, 2011.
Suppose further that if the Federal Reserve changes the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should A. reduce the discount rate by 3 percentage points B. reduce the discount rate by 10 percentage points C. raise the discount rate by 3 percentage points D. raise the discount rate by 10 percentage points 6. In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because A. the country eventually will consume more and produce less B. the country eventually will
Each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The firm’s straight bonds yield 10%. Each warrant is expected to have a market value of $2.00 given that the stock sells for $42. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par? Question 24 Europa Corporation is financing an ongoing construction project.
You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? (Points : 6) $2,697.93 $2775.79 $2,921.86 $3,075.64 $3,237.52 BEGIN Mode N 3 I/YR 5.5% PMT $1,000 FV $0.00 PV Therefore, to receive $1,000 at the beginning of each year for 3 years at 5.5%, the fair value you should pay is $2,697.93 HP 12C Suppose that you are offered an investment that will pay you $1,000 per year for 10 years. If you can earn a rate of 9% per year on similar investments, how much should you be willing to pay for this annuity? In this case we need to solve for the present value of this annuity since that is the amount that you would be willing to pay today.
FV = PV x (1+r)5; $100,000 = $65,000 x (1=r)5; 1.53846 = (1+r)5; (1.53846) 1/5 = 1+r; 1.08998 = 1+r; annual rate = 8.998$ 13. PV of Annjuity = Payment x [1-(1+r)-5]/r; $33,520 = $10,000 x [1-(1+r)-5]/r Period 9nper0 = 5; Payment = $10,000; Present Value (PV) = $33,250; Future Value (FV) = $0; Rate of Return =