This morning a corporate bond of Carnival Corp Inc was being traded at par of $1,000. By midday, the company announces that it will not be able to pay future annual coupons but only the principal when the bond expires. If the yield to maturity is 10% p.a. compounded annually, the coupon rate is 10% p.a., and the bond is due to expire in 4 years' time, at what price would this bond of Carnival Corp Inc trade for after the announcement? a. $836.23 b. None of the options is correct c. $819.65 d. $944.10 e. $776.84
Q: 6) Plum plc wishes to replace its existing pressing machine with a new model immediately. The new…
A: Net Present Value - It is the difference between the present value of cash outflow and present value…
Q: Mr. Jonsson is a salesperson handling a line of computer software throughout Western Canada. During…
A: You have specifically asked how CCA and operating costs were calculated. This solution focuses on…
Q: This is with excel. With a pen and paper, what is the equation to solve this problem. The visuals of…
A: Solution:- When an equal amount is saved each period at end of period, it is called ordinary…
Q: Assume that expected rates of inflation over the next 5 years are 4 percent, 7 percent, 10 percent,…
A: Average inflation rate = ((1+i1)*(1+i2)*(1+i3)*(1+i4)*(1+i5))1/n-1 Where i1 = Inflation rate year 1…
Q: Assume you have $9000 to invest; A stock is trading at $90.00. A call option that expires in one…
A: As the portfolio's investment is made in stocks only, return on portfolio is calculated as the…
Q: 1.) An eligible Pag-IBIG member may borrow up to 80% of his total accumulated value (TAV) subject to…
A: Since you have asked multiple question , we will solve first question for you. If you want any…
Q: Fancy Paws' year-end price on its common stock is $20. The firm has a profit margin of 12 percent,…
A: The price-earnings ratio, sometimes referred to as the P/E ratio, P/E, or PER, measures the…
Q: Solve the following problems involving real rates of return and interest. a) Find it with 5.5%…
A: Here, To Find: Part A. Real rate of interest =? Part B. Nominal rate of interest =? Part C. Average…
Q: A firm deposits some funds in a special account at 4.8% compounded monthly. What effective rate will…
A: The effective interest rate is the rate that is provided after the effects of compounding are taken…
Q: Answer in typing other wise I will downvote yo
A: Dividend is the amount which is paid to the shareholder of the company out of the earnings. It…
Q: You are short 3,500 shares of a $40 stock and based on its chart, you believe the shares could rise…
A: 1) We are short on the stock so we short sold the share at $ 40. To make profit, we have to buy the…
Q: Brown Mack Ltd currently has two large manufacturing divisions that share a single plant. Brown Mack…
A: Overheads are the indirect expenses that are incurred in the business. They are allocated on…
Q: Formulate but do not solve the problem.
A: As per instructions only the formula will be given, the completed solution will not be provided. a =…
Q: Everybody’s Fitness's 2021 income statement is reported below (in millions of dollars) (Use…
A: 1) Tax liability Maximum interest allowed = EBITDA * 30% = 1190 Million * 30% = 357 Tax Liability…
Q: In 2021, a standard 30-year fixed mortgage in the US could be had for somewhere around 3%. Following…
A: Data given: Option I Rate=3% Cost of house=$629,000 n=30 years Down payment= 20% Option II Rate=7%…
Q: When your firm hires a new employee this year, it is obligated to contribute GBP £5,000 to a defined…
A: Given, The amount contributed is GBP 5000 Inflation (growth rate) is 2% Rate of return is 10%
Q: Fantastic Footwear can invest in one of two different automated clicker cutters. The first, A, has…
A: The IRR represents the actual return provided to the project. The IRR is used to measure the…
Q: Massy Store makes a $10,500 investment at Republic Bank Ltd on January 1, 2019. At the end of…
A: Future Value refers to the compounded value of a single cash flow received today or multiple cash…
Q: e expected return of Project Y is at least equal to the expected return of Project X, and the…
A: There should be optimal combination of risk and return. Return is important but the risk should be…
Q: A man wishes to have P10,000.00 when he retires 20 years from now. If he can expect to receive 4%…
A: Information Provided: Interest rate = 4% Future value = 10,000 Total number of annual payments = 20…
Q: Using the CAPM theory, if the Volatility of a stock is twice as great as the market, the market…
A: Capital Asset Pricing Model (CAPM) is used to determine expected return on a particular security…
Q: Question 8 a) What type of graph is suitable to show the correlation between the revenue generated…
A: Data points are available. We have to identify the right graph to depict some of the data points,…
Q: The project's discounted payback period is .years.
A: Information Provided: Cost of capital = 10% Year 0 CF = -$158,000 Year 1 CF = $27,000 Year 2 CF =…
Q: Estimate the value of a 1-year option to delay using decision tree analysis. Enter your answer in…
A: Value of Option: The premium paid over an option's inherent value is known as the time value or…
Q: A man decided to buy a brand new car. The car's cash price is P 2M. There is an option for…
A: Periodical Payment - It includes a portion of principle payment along with Interest. Finance is…
Q: On average, a firm sells $2,000,000 in merchandise a month. It keeps inventory equal to one-half of…
A: Solution:- Inventory Conversion Period (ICP) refers to the days or time it takes for a firm to…
Q: u buy a house of $500,000 today. You put a down payment of 20% and borrow a fixed-rate mortgage of…
A: Mortgage loans are taken in the purchase of home and they are paid by equal monthly installments…
Q: $500 is deposited into an account at time 3 years and $750 is deposited into the same account at…
A: Amount Deposited $ 500.00 Time Period 3 Amount Deposited $ 750.00 Time Period 8…
Q: Your company is deciding whether to purchase a durable delivery vehicle or a short-term vehicle. The…
A: In the world of finance in general and in the domain of capital budgeting in particular equivalent…
Q: Consider the following information: State of Economy Probability of State of Economy Rate…
A: The expected return is the anticipated amount of profit or loss from an investment. The expected…
Q: Rebalancing of an index will occur most frequently for a(n): Price-weighted index. Equal-weighted…
A: A Stock market index is used as a barometer of market behaviour. It reflects price movements of…
Q: The Johnson Family borrowed $3,000 for 18 months at 4% interest. What is the total payback on the…
A: Future value refers to the value of the current asset at some future rate on the basis of…
Q: When the Australian government issues government bonds during a tender, the cumulative…
A: Bidding information are available. From the order book, we have to find the cut off yield.
Q: A company is considering an investment with the Bollars. The general inflation rate (7) during this…
A: The cash flows are in constant dollars. Constant dollars means that the dollar (or the cash flow)…
Q: If a certain stock sells for 33.812 dollars on the NYSE, how much will it sell for, in dollars, on…
A: Price of a stock on on exchange in known. We have to find the price of the same stock on another…
Q: Current Assets = 54,306 Total Assets = 154,815 Current Liabilities = 15,425 Total Liabilities =…
A: Ratio analysis is the method of checking the company's operational efficiency, liquidity, and…
Q: 4.Hassan plans to retire 40 years from now, he wants to have AED 4.5 million. Hassan thinks he can…
A: Information Provided: Future value = 4,500,000 Interest rate = 10% Period from today till future…
Q: Given the following anomalies, which is inconsistent with weak-form market efficiency?…
A: Days of the week effect is a market anomaly which will be reflecting that market will be providing…
Q: Find the quarterly payment.
A: Information Provided: Amount owed = 5000 Period = 8 years Interest rate = 10% payable quarterly
Q: A portfolio invests in 35% in a stock S1 and the rest in another stock S2. The expected return and…
A: Portfolio refers to a combination or collection of financial instruments or securities stocks,…
Q: Calculate the CAT (total annual cost) for option 1 and then find which option is better to ask for a…
A: Given: Option 1: MNL Bank 2.25% simple monthly interest rate Option 2: Savings Bank CAT= 30%…
Q: Remember from class that YTM - Riskfree = sum of rilk premiums. Assume the risk-free rate is 1.924…
A: Risk free rate = 1.924 Credit risk premium = 1.260 Maturity perium = 1.218
Q: You've collected the following information from your favorite financial website. 52-Week Price Lo…
A: Dividend Growth Model: a strategy based on the belief that dividend growth will always be in…
Q: Jenny Enterprises has just entered a lease agreement for a new manufacturing facility. Under the…
A: The annuity payments that are made at the beginning of the year are called annuity due and the ones…
Q: What is the purpose of pro forma financial statements on this table?
A: Porforma financial statements are considered as forecasted financial statements for future years…
Q: A passbook savings account has a rate of 8%. Find the effective annual yield, rounded to the nearest…
A: Y = (1+(r/n))n - 1 Where Y = Effective Annual Yield (TO be calculated) r = Annual rate of interest…
Q: All outcome between a loss of -$60 million to a gain of $140 million are equally likely on a one…
A: The outcomes on a portfolio are uniformly distributed. We have to calculate the 99% VaR. VaR…
Q: u decided to take a study abroad for the Spring 2023 semester. You decided to save $200 each month…
A: Future value of annuity includes the amount being deposited and amount of compounding interest being…
Q: A man owes P50,000.00 with interest at 9% payable semi-annually. What equal payments at the…
A: Semi-annual repayment is a payment made every six months to repay the debt amount with a certain…
Step by step
Solved in 2 steps
- A company is planning to issue perpetual, callable bonds with a coupon rate of 8% paid annually, and a par value of $1,000. The nominal interest rate on these bonds will be 9% for the next year. In one year, the nominal rate on the bonds will be either 10% with probability 0.6, or 8% with probability 0.4. The bonds are callable at $1200. Assuming the bonds are called if the interest rate decreases, what is the price of the callable bond today?GHI Company issued a 7-year bond on January 2, 2020, with a par value of $550,000 and pays its investors cash interest payments semi-annually ( every six months). The market rate for this bond is 6% and the coupon rate is 5%. What is the present par value (PV) of the Face Value? For this Bond?On January 1, 2020, Company H issues a $20,000,000 bond with a 9% coupon rate. The bond has a present value of $20,811,010, and the market interest rate was 8%. The bond will have a 5-year life, pay interest semi-annually, and amortize using a straight line. The bond's face value, a discount, or a premium? B) How much would the semi-annual interest payments cost? C) How much will be added to interest expense each time a payment of interest is made? D) What will be the bond's carrying value on December 31, 2021?
- TreeTop Inc. bonds was issued on Oct 15th, 2010. The bonds have a coupon rate of 6.2%, with interest paid annually. The par value of the bonds is $1,000 and the maturity is Oct 15th, 2042. If the market price of one contract of TreeTop bond on Oct 15th, 2020 is $1,105, what is the annual interest rate to be earned by an investor who bought it on Oct 15th, 2020 at the said market price and plan to hold on to the bond till maturity? Round to the 0.01%, i.e., two decimal places. Enter your answer in the form of a percentage. For example, if your answer is "12.34%", enter "12.34".Last year Carson Industries issued a 10-year, 15% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,075 and it sells for $1,270. What is the bond's nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.Crane, Inc., has four-year bonds outstanding that pay a coupon rate of 7.00 percent and make coupon payments semiannually. If these bonds are currently selling at $919.89. What is the yield to maturity that an investor can expect to earn on these bonds? What is the effective annual yeild?
- Tony's Pizzeria plans to issue bonds with a par value of $1,000 and 10 years to maturity. These bonds will pay $45 interest every 6 months. Current market conditions are such that the bonds will be sold to net $937.79. What is the YTM of the issue that a broker would quote to an investor?Adama's Fish Market Inc. issued a bond that will mature in 15 years. The bond has a face value of $1,000 and an 7% coupon rate, paid semiannually. The price of the bond is currently $1,165. The bond is callable in 5 years at a call price of $1,050. What is the bond's yield to maturity? What is the bond's yield to call?Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 1.8% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j2 = 11.9% p.a. Assume that this corporate bond has a 5% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places. O a. O b. $79.790 O c. $61.241 O d. $55.718 a. $78.509
- Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 1.69% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j2 = 10.9% p.a. Assume that this corporate bond has a 6% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places. Answer a. $59.319 b. $81.541 c. $80.092 d. $53.631A corporate bond is currently quoted at a price of $1197.93 and carries a 10 percent annual coupon rate. The bond’s face value is $1000, and pays coupon semiannually. What is the current yield of the bond? Suppose the bond price in one year is $1193.68, assuming no change in yield-to-maturity, what is the capital gain yield? What is the yield-to-maturity for this bond?Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 6.96% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j2 = 2.2% p.a. Assume that this corporate bond has a 11% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places.