+1-415-315-9853

info@mywordsolution.com

## Accounting

 Accounting Basics Cost Accounting Financial Accounting Managerial Accounting Auditing Taxation

problem 1) Part A

You are considering three alternatives investments in bonds but would like to gain the impression of the extent of price volatility for each given alternative changes in future interest rates. The investments are:

I. A two year bond with the annual coupon of 6 per cent, par value of Rs 100 and next coupon payment in one year. The present yield to maturity on this bond is 6.5 per cent.

II. A ten year bond with an annual coupon of 6 percent a par value of Rs 100 and the next coupon payable in one year. The present yield to maturity on this bond is 7.2 per cent.

III. A twenty year bond with an annual coupon of 6 per cent, a par value of Rs 100 and next coupon due in one year. The current yield to maturity on this bond is 7.7 per cent.

Required:

a. Draw the suitable yield curve.

b. Compute the market price of each of the bonds.

c. Compute the market price of the bonds on the assumption that yields to maturity rises by 200 basis points for all bonds.

d. Compute the market price of the bonds on the assumption that yields to maturity fall by 200 basis points for all bonds.

e. Which bond price is the most volatile in circumstances of changing yields to maturity? Provide supporting reasons. Part b:

You own shares of Dickson’s preferred stock, which currently sells for Rs. 400 per share and pays an annual dividend of Rs. 42.50 per share.

(i) Compute expected return.

(ii) If you require an 8% return, given the price, must you sell or buy more stock?

(iii) The earnings of the Company have increased over a 10 – year period to Rs 57.

Compute the rate of growth of the earnings per share.

(iv) Why is preferred stock more similar to debt than equity?

Accounting Basics, Accounting

• Category:- Accounting Basics
• Reference No.:- M96392

Have any Question?

## Related Questions in Accounting Basics

### Assignment the apportionmentyou are a census officer in a

Assignment: The Apportionment You are a census officer in a newly democratic nation and you have been charged with using the census data from the table below to determine how 100 congressional seats should be divided amo ...

### Discussionpart 1 please respond the following question no

Discussion Part 1 please respond the following question no less then 350 words (original work, no plagiarism, 1 reference "learning experience and application of knowledge" please respond to the following: • Assume you h ...

### Question 1the company you work for has a large amount of

Question 1 The company you work for has a large amount of disposable cash and very little debt on its books. The board of directors has expressed an interest in taking this money and investing in equity and debt securiti ...

### Discussionpart 1 please respond the following question no

Discussion PART 1 PLEASE RESPOND THE FOLLOWING QUESTION NO LESS THEN 350 WORDS (ORIGINAL WORK, NO PLAGIARISM, 1 Reference "Negative Cash Flow" Please respond to the following: • Assess how the free cash-flow method can b ...

### 1 the accounting equation is assets liabilities owners

1. The accounting equation is assets = liabilities + owner's equity. Please explain the relationship between economic resources and claims to economic resources. Why must this equation always balance? What transactions i ...

### Mcreath corporation is a leading producer of fresh frozen

McReath Corporation is a leading producer of fresh, frozen, and made from concentrate citrus drinks. The firm was founded in 1922 by Charles McReath, an army veteran who settled in Jacksonville, Florida, after World War ...

### Niagular corp just reported a net income of 8500000 amp its

Niagular Corp. just reported a net income of \$8,500,000 & its current stock price is \$25.75 per share. Niagular Corp. is forecasting an increase of 25% for its net income next year, but it also expects it will have to is ...

### Assignmenta manufacturing company is thinking of launching

Assignment A manufacturing company is thinking of launching a new product. The company expects to sell \$950,000 of the new product in the first year and \$1,500,000 each year thereafter. Direct costs including labor and m ...

### The company uses a periodic inventory system for specific

The Company uses a periodic inventory system. For specific identification, ending inventory consists of 375 units, where 190 are from the January 30 purchase, 80 are from the January 20 purchase, and 105 are from beginni ...

### Write a 700- to 1050-word paper including the followingthe

Write a 700- to 1,050-word paper including the following: The purpose of accounting and financial reporting within your organization or an organization with which you are familiar. A description of the people, processes, ...

• 13,132 Experts

## Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

### Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

### Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

### Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

### Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

### Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen