What is the price of Thera Corpn's zero coupon bond with 10 years to maturity? The bond was originally sold with a yield to maturity equal to 10 percent, but the market rate today is 11 percent.
Q: John has been asked to evaluate whether it would be better to lease an asset or to borrow money from...
A: Net Present Value is the difference between the present value of cash inflows and present value of c...
Q: Penny Pincher Discount Grocers has issued a bond with a coupon rate of 11%. It recently closed at a ...
A: Current yield = Face value of bond * Coupon rate / Current stock price
Q: plockchain financial transactions?
A: Blockchain helps in making transparency in the financing industry while users are considering the pu...
Q: Mr. James Lubay working in the United States planned of returning to the Philippines at the end of 2...
A: To Find: Principal in the fund at the end of 2001
Q: Elona Zuckerberg is the CFO of Facenote company. made the following statements in a conference call ...
A: The firm capital structure consists of sources of capital which include debt, preference and equity ...
Q: Big Rock is listed on the local stock exchange and its stock has had mixed performance over the last...
A: Initial value is $1000 Value at end of year 1 is $1268 Value at end of year 2 is $1334 Value at end ...
Q: Zipliners R Us is a fairly new business with a market price of $30 and Rose Gardens anticipates that...
A: The actual market price of share keep on changing with respect to demand and supply condition wherea...
Q: Which one of the following NOT a correct matching of a concept associated with liquidity planning wi...
A: Estate: The net worth of the assets an individual holds is known as an estate. An individual's estat...
Q: Yawi has a medium-size trucking company that distributes appliances within Metro Manila. Fuel consum...
A: The discounted cash inflows or outflows of future payments or receipts are known as the equivalent p...
Q: Bausch Company is presented with the following two mutually exclusive projects. The required return ...
A: Net Present Value discounts all the future cash flows by the rate of return and is used to find the ...
Q: The selling price of the preference shares is P150. the business is subject to a 30% income tax rate...
A: The cost of preference share = Annual dividend/Current price of the share Annual dividend = Par valu...
Q: We are considering the purchase of a $760,000 computed based inventory management system. It is in c...
A: CCA is the deduction from the value of the asset over the years of its life. It has a set of rates d...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: NPV is the difference between present value of all cash inflows and initial investment NPV =PV of al...
Q: The FFR is an important influence on other interest rates, like those on car loans and home loans, b...
A: Future Value: The future value is the amount that will be received at the end of a certain period. T...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: "Hi, Thanks for the Question. Since you asked multiple sub parts question, we will answer first thre...
Q: A firm has a debt-equity ratio of 0.5 and a cost of debt of 5 percent. The industry average cost of ...
A: Given, Debt equity ratio is 0.5. Cost of debt is 5% Cost of unlevered equity is 15%
Q: Select all the options that would be part of the initial investment of a project consisting in estab...
A: The initial investment will consist of all one-time expenses and payments that are incurred in makin...
Q: 17. Which of the following statements is true about bonds in the US? A) State and local governments ...
A: Bond is referred as the fixed income instruments, which used to represent the loan that are made thr...
Q: Cash Conversion Cycle. Will each of the following events increase or decrease cash conversion cycles...
A: Cash conversion cycle represent the number of days taken by the company to convert its goods into ca...
Q: If you invest your P3,000 every year at 4% interest rate, how many months does it take to be worth P...
A: Annual investment (A) = P 3000 r = 4% n = Years to accumulate P 117247.80
Q: If only some investors perform security analysis while all others hold the market portfolio, would t...
A: The Capital Market Line (CML) is a subset of the CAL, which is the line that depicts an investor's r...
Q: What will be the equivalent uniform annual amount that will be deposited in a bank for 15 years that...
A: Time Period 15 Initial Cost P20,00,000.00 Additional Cost at the end evry 5th year P5,00,000...
Q: Rose Gardens is looking into investing opportunities. The following are potential opportunities: Zi...
A: Dividend is the amount which is paid as a reward to the shareholders of the company for the risk the...
Q: What is the NPV of the investment? (Rounded to the nearest whole dollar)
A: Net Present Value: It represents the project's or investment's profitability in dollar amounts. It ...
Q: With a required rate of return of 17%, the IRR of a standard capital budgeting project is equal to 1...
A: Internal rate of return is the rate which the NPV of the project is zero. Net present value is the d...
Q: A company has an ROE of 12% and payouts 44% of its earnings as dividends. It is planning to pay a $...
A: Dividend is the part or share of profits that is being distributed to shareholders of the company. D...
Q: Duration is a measurement of a bond’s interest rate risk. It is also referred to as the responsivene...
A: Bond duration or duration of the bond means the price sensitivity of the bond when the interest rate...
Q: Determine the amount of P 45000 after 9 years if the rate is 7% compounded continuously. O 86412 O 8...
A: Amount after 9 years can be calculated with the help of future value function with continuous compou...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: Operating cash flows is the cash flows generated from normal operations. It can be calculated Operat...
Q: Big Rock has several investment portfolios with a local mutual fund company. One of the company's di...
A: The formula for the calculation of Sharpe ratio is as follows: Sharpe ratio=Expected return on portf...
Q: omposite Portfolio Performance Measures Big Rock has several investment portfolios with a local mu...
A: Sharpe measure: It's a formula that calculates an investment's real return after factoring in the r...
Q: The generator set requires no maintenance until the end of 2 years when P60,000 will be needed for r...
A: Here, At the end of year 2 , maintenance cost is P60,000 From Year 3 to Year 7, Maintenance Cost is ...
Q: New parents wish to save for their newborn's education and wish to have $37,000 at the end of 18 yea...
A: Given P=$37,000 r= 7.8% n=1 t=18 years
Q: How long will it take for an investment to fivefold its amount if money is worth 14% compounded cont...
A: Interest rate (r) = 14% e = 2.7182818284590452353602874713527 Period = t Future value factor (FVF) =...
Q: Melinda opened a savings account for her daughter on ? day she depositing $1,000: Each year on her b...
A: Annual deposit (A) = $1000 Number of deposits (n) = 22 r = 9.5%
Q: In the Middle Ages, goldsmiths took in customers’ deposits (gold coins) and issued receipts that fun...
A: Customers find goldsmiths to be extremely convenient when conducting a large number of gold transact...
Q: Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 6% compounded mo...
A: Here, Fully Amortizing FRM = $1,000,000 Annual interest rate = 6% compounded monthly Refinancing cos...
Q: Galleon Industries is building a temporary manufacturing plant which will be completely removed afte...
A: Cash flow from a project includes all its cash income less cash expenses. It does not include any no...
Q: If money is worth 8% compounded quarter ly, determine tne present value of the following: a. An annu...
A: Discounting is a technique which is used to compute the PV of future cashflows by using an appropria...
Q: Question 3 What is the price of Thera Corpn's zero coupon bond with 10 years to maturity? The bond w...
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rat...
Q: Consider a 9-year, $1,000 par value, 12% annual-pay bond that is currently trading at a flat price o...
A: Time to maturity of bond is 9 years Par Value is $1,000 Coupon rate is 12% Annual pay Current tradin...
Q: how much will a deposit of P2, 500 in 12 years
A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...
Q: Shatin Intl. has 10.3 million shares, an equity cost of capital of 12.6% and is expected to pay a...
A: Total Stock Value = (Future value of total dividends + repurchasing of stocks) / equity cost of capi...
Q: 9. In December, The Corner Coffee Spot had an average inventory of $123, 456 and retail sales of $19...
A: Since you have posted multiple questions, we shall be solving the first one for you. In case you wis...
Q: Yield to maturity The bond shown in the following table pays interest annually. (Click on the icon h...
A: Given, the par value is $1000 Coupon rate is 7% Term to maturity is 9 years and market price is $11...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: First we need to calculate the cost of equity by using this equation Ke =D1P0+g where D1 =next divid...
Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for...
Q: z is planning to attend college when she graduates from high school four years from now. She has mad...
A: Money deposited in the account grow with the time according to the interest rate and time of money. ...
Q: Carmella purchased a refrigerator under a conditional sale contract that required 24 monthly payment...
A: Given, Monthly payments $70.26 Term is 24 months Rate is 15% compounded annually. The payment starte...
Q: Given the below assumptions, what is the level of sales required for a two department (food and beve...
A: The Return on Investment or ROI is a measure of profitability which shows the returns which is earne...
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
- QUESTION 3 The market price of a bond is $1,119.90; it has 4 years to maturity, a $1,000 par value, and pays a coupon of $100 every year. What is the yield to maturity? (assume the coupons are paid annually). A. 3.27% B. 6.50% C. 6.54% D. 10.00% E. None of the aboveQuestion 4 The following is a list of prices today for bonds with different maturities. Face value is 100. Assume that the bonds pay their coupons annually, and that the YTMs in the table are annualized and compounded annually. Both coupon rate and yield to maturity (YTM) is in percent. Maturity (years) Price Coupon rate YTM 1 98.00 0 ?2 100 ? 5.00 3?9 6.00 Fill in the missing values in the table.What are the annualized spot rates for years 1 & 2 (r1 & r2)? Given r1 & r2, what is the price of a 2-year coupon bond with annual coupon rate of 7%? What is the duration of this bond?QUESTION 15 Suppose that all investors expect that the interest rates for the 4 years will be as follows. What is the price of a 3-year zero coupon bond with par-$1,000? Year 1-Year Forward rate 4.6% 2 4.9% 3 5.2% 4 5.5% O a. $1,000.00 Ob. $866.32 Oc. $858.92 Od. $821.15
- Question 7 You hold an annual coupon bond for 1 year, receiving the 0.14 coupon before selling. When bought it had 6 years to maturity, and the YTM was 0.095. Over the year, interest rates ROSE by 0.002What is the total holding period return for this investment? Group of answer choices 0.0939 0.0856 0.0903 0.0879 0.0820INV3 P1b Bond # 1 2 3 4 1 - year strip bond 2- year strip bond 2-year 6% coupon bond 2-year 7% coupon bond Purchase Price for the bond) 950 ? ? ? Year 1 cash flow 1000 0 60 70 Year 2 cash flow 0 1000 1060 1070 Yield to Maturity ? ? 5.50% ? If the expectations theory of the yield curve is correct, what is the market expectation of the price that bond #3 will sell for next year?Question 6 You hold a zero coupon bond when there is a sudden change in interest rates. It has 18 years to maturity. Yield to maturity is 0.055, and rates change by FALLING -0.008 overnight.By how much does your bond change in value as a percentage or decimal?(Zero coupon bonds assume semi-annual compounding.) 0.1601 0.1689 0.1508 0.1642 0.1556
- Question 5 0/1 Oscorp has just issued its Norman Special Long Bond. The bonds have a maturity of 25 years, a coupon rate of 0.50% and pay the coupon on a semi-annual basis. The face value of the bond is $1000. The bonds are trading at a YTM of 5.00%. What is the current yield of these? (Enter your answer as a % accurate to two decimal points. DO NOT add a % symbol or any extraneous punctuation.)HW#3 Consider a coupon bond that has a $1,000 par value and a coupon rate of 10%. The bond is currently selling for $1,150 and has 8 years to maturity. What is the bond’s yield to maturity? A 10-year, 7% coupon bond with a face value of $1,000 is currently selling for $871.65. Compute your rate of return if you sell the bond next year for $880.10. Consider the decision to purchase either a 5-year corporate bond or a 5-year municipal bond. The corporate bond is a 12% annual coupon bond with a par value of $1,000. It is currently yielding 5%. The municipal bond has an 8.5% annual coupon and a par value of $1,000. It is currently yielding 7%. Which of the two bonds would be more beneficial to you? Assume that your marginal tax rate is 35%. Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%. Consider the bond in the previous question. Calculate the expected price change if interest rates drop to 6.75% using the…QUESTION 6 A. B. Matur ity (year s) 1 D. 2 3 $114.51 $113.45 $112.508 Spot rate (%) $120.54 1.25 1.50 19 2-years from now 1.908 Using the spot rates, what would be the value of an option-free bond that pays 6% annual coupon? Par value is $100. 1-year Forward rate (%) 1.70 491 0-years from now 1.25 1-year from now 1.75 Cash flow $3 $3 $103
- Question 3 A$100 000 bond has 3 years to maturity, and 8% p.a. coupon rate (paid annually). The current yield rate is 10%. Required: a) What is the duration of this bond? b) What is the price of this bond? c) If the current yield is decreased by 100 basis points, 1) What is the percentage change in bond price using the duration approach? 2) What is the price of this bond with this new yield rate?QUESTION 2 Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the yield to maturity of the bond? A. 30% B. 0% C. 35.4% D. 100.2%Question 8 (i) A Treasury bond with £100 maturity face value has a £9 annual coupon and 15 years left to maturity. What price will the bond sell for assuming that the 15 year yield to maturity in the market is 4%, 9% and 14% respectively? (ii) Without using any further calculations, comment on whether the price movements would have been greater or smaller if instead of using a 15 year bond a 10 year bond had been used.