Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1) "SRK Airport" authority issued a series of 3.4 percent 30-year bonds in February 2012. Interest rates rose substantially in the following years of the issue and made the price of the bond decline. 13 years later, in February 2025 the price of the bond has dropped from $1000 to $675. Assume that the bond requires annual interest payments.
a) What is yield to maturity of the bond? (Par value= $1000 in 2012)
b) find out the yield to maturity in February 2025.
c) If interest rate stabilizes after 2025 and remains same for the reminder of the life of the bonds, what will be the bonds price in 2040, two years before maturity.
d) What is the bond price during maturity (in 2042)?
e) Assuming the condition in part (c) what would have been the current yield of a "SRK Airport" bond in 2025 and in 2040?

2) In January 1, 2012, Anim purchased an outstanding Rosette Corporation bond that was issued on January 1, 2010. The Rosette Corporation bond has a 9.5 percent annual coupon and a 30-year original maturity (matures on December 2039). There is a 15-year call protection (until December 2014), after which time the bond can be called at 109 (109 percent of per or at $1090). Interest rates have declined since the bond was issued, and the bond is now selling at 116.575 percent of par or at $1,165.75. Anim wants to determine both the yield to maturity and the yield to call of this bond. (Note: during calculation of yield to call assume that the bond will be outstanding until the call date. Thus the investor will have received interest payments for the call protected period and then will receive the call price- in this case which is $1090 on the call date).
a) What is yield to maturity of the Rosette bond? What is its yield to call?
b) If Anim purchase this bond, which return do you think anim would actually earn? describe your answer.
c) If the bond had sold at a discount, would the yield to maturity or the yield to call have been more relevant?

3) Mashrafee Inc. is expected to grow at a constant rate of 6 percent and its dividend yield is 7 percent. The company is about as risky as the average firms are in the industry.However, the company just successfully completed some R&D work that leads the company to expect that its earnings will grow at a rate of 50 percent this year and 25 percent the following year, after which growth should match the 6 percent industry average rate. The last dividend paid (D0) was $1.00. What is the value per share of the firm's stock?

4) You purchase a share of Kamal Corporation stock for $21.40. You expect it to pay dividends of $1.07; $1.1449 and $1.2250 in years 1, 2 and 3 respectively and you expect to sell it at a price of $26.22 at the end of 4 years.
a) find out the growth rate in dividends and the expected dividend yield.
b) Assume that the find outd growth rate (in a) is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock's expected total rate of return?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925226

Have any Question? 


Related Questions in Basic Finance

Develop a three- to five-page analysis on the projected

Develop a three- to five-page analysis on the projected return on investment for your college education and projected future employment. This analysis will consist of two parts. Part 1: Describe how and why you made the ...

Mm proposition i with taxesthe maxwell company is financed

MM Proposition I with Taxes The Maxwell Company is financed entirely with equity. The company is considering a loan of $1.72 million. The loan will be repaid in equal installments over the next two years, and it has an i ...

1 describe the circumstances in which it is acceptable to

1. Describe the circumstances in which it is acceptable to conduct research without obtaining informed consent from human participants. 2. What does IRB stand for, and what is its purpose? 3. Is it acceptable for researc ...

1 what is the sinking-fund factor how and why is it used2

1. What is the sinking-fund factor? How and why is it used? 2. What is an internal rate of return? How is it used? How does it relate to the concept of compound interest?

How does the value of an unlevered firm change if it takes

How does the value of an unlevered firm change if it takes on debt in the presence of corporate taxes? Repeat the analysis for ANF from the previous problem, after relaxing only the "no corporate tax" assumption of perfe ...

1 how do commercial banks obtain their funds what is

1. How do commercial banks obtain their funds? What is financial restructuring advising? The following is an excerpt from the 2009 Annual Report of Bank of America (p. 24): Through our banking and various nonbanking subs ...

1 tall trees inc is using the net present value npv when

1. Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company's project, assuming the company's cost of capital is 9.83 percent. The initial outlay for the pr ...

A hedge fund is currently engaged in a plain vanilla euro

A hedge fund is currently engaged in a plain vanilla euro swap in which it pays euros at the euro floating rate of Euribor and receives euros fixed. It would like to convert this position into one in which it pays the re ...

Imagine that you have collected the following set of iq

Imagine that you have collected the following set of IQ scores: a . Construct a simple frequency distribution of these scores. b. Construct a grouped frequency distribution of these scores that includes both frequencies ...

Drozshiking gear company has found that its common equity

Droz'sHiking Gear Company has found that its common equity shares have a beta equal to 1.50 while the risk-free return is 12 percent and the market risk premium is 6 percent. It has 10-year bonds outstanding with a marke ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

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.

Ask Now Help with Problems, Get a Best Answer

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