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Discuss how to calculate the new bond price after the interest rate change.
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Valuation (finance)
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Suppose Ford Motor Company sold a issue of bonds with a 10 years maturity, a $1000 par value, a 10 percent coupon rate, and semiannual interest payments. a) Two years after the bonds were issued, the going rate of interest on bond such as these fell to 6
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Suppose East Coast Yachts issues the coupon bonds with a make-whole call provision. The make-whole call rate is the Treasury rate plus .40 percent. If East Coast calls the bonds in seven years when the Treasury rate is 4.8 percent, what is the call pri
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Grand Adventure Properties offers an 8 percent coupon bond with annual payments. The yield to maturity is 6.85 percent and the maturity date is 7 years from today. What is the market price of this bond if the face value is $1,000? a. $954.60 b. $793.63 c.
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Indicate whether the following is true (T) or false (F). If the market (effective) interest rate is higher than the contractual (stated) rate, the bonds will sell at less than face value, or at a discount.
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Define American Express’s overall business-level strategy. Does Bank 2.0 fit into American Express’s overall business-level strategy? How does Bank 2.0 stand up against the competitors in the industr
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How much would you pay for a perpetual bond that pays an annual coupon of $200 per year and yields on competing instruments are 20%? (Round your response to the nearest penny.) If competing yields are
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What is the current yield for a bond that has a par value of $1,000 and a coupon interest rate of 10.95%? The current market price for the bond is $921.01.
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Bond Quotes. You can find current bond prices at finra-markets.morningstar.com/ BondCenter. You… 1 answer below Bond Quotes. You can find current bond prices at finra-markets.morningstar.com/ Bond
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What are revenue multiples for technology startups?
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Casino Inc. expects to pay a dividend of $4 per share at the end of year 1 (Div1) and these dividends are expected to grow at a constant rate of 5 percent per year forever. Required: If the required rate of return on the stock is 15 percent, what is the c
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A Ford Motor Co. coupon has a coupon rate of 6.75% and pays annual coupons. The next coupon is due tomorrow and the bond matures 32 years from tomorrow. The yield on the bond issue is 6.45%. At what p
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A government-issued bond has a nominal value of 100 and the annual coupon is 6. The bond has 35 years until maturity. Its current yield is 5%. The current market price of the bond is A. 100. B. 105. C. 106. D. 120.
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Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of 9 percent, matures in 3 years, has a total face value of $6 million, and is quoted at 108 percent of face value. The second issue has a 7.5 percent coupon, matures i
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An Iowa state savings bond can be converted to $500 at maturity 16 years from purchase. If the state bonds are to be competitive with U.S. savings bonds, which pay 9% annual interest? (compounded annu
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Calculate the price of each of these bonds. Jason Greg is a recent retiree who is interested in investing some of his savings in corporate bonds. Listed below are the bonds he is considering adding to his portfolio. Bond A has a 7.5% semiannual coupon, m
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How is a bond’s coupon rate different from its coupon yield?
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How is the net asset value (NAV) of a mutual fund determined? What is meant by the term, marked-to-market daily?
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Jerry has the choice of two bonds, one that pays 5 percent interest and one that pays 2 percent interest. Which of the following is most likely? a. The 2 percent bond is more risky than the 5 percent bond. b. The 5 percent bond is a U.S. government bond,
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Consider the following three bond quotes: a Treasury note quoted at 98:25, a corporate bond quoted at 103.20, and a municipal bond quoted at 101.85. If the Treasury and corporate bonds have a par valu
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Marcy’s, Inc., operates nearly 850 Marcy’s and Bloomington’s department stores globally. The company does more than $24 billion in sales each year. Assume that as part of its cash management strategy, Marcy’s purchased $11.4 million In bonds at par for c
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How many of the coupon bonds must East Coast Yachts issue to raise the $50 million? How many of the zeroes must it issue?
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Acme Chemical, Inc. is a major manufacturer of chemical products for the agricultural industry, including pesticides, herbicides, and other compounds. Due to a number of lawsuits related to toxic wast
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How can AutoZone differentiate itself from rivals O’Reilly Automotive and Advance Auto Parts?
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Pet food company bonds pay an annual coupon rate of 9.77 percent. Coupon payments are paid semiannually. Bonds have 9 years to maturity and a par value of $1,000. Compute the value of pet food company bonds if the market interest rate on this type of bond
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Differentiate between the stated rate and the market rate, and discuss how each of these rates is used in accounting for bonds.
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Calculate the YTM of a bond N= 32 PMT= 38.75 PV= -984 FV= 1000 Flotation Costs are 2% What is the YTM? (Please show your work and the formulas used.)
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How should this be entered into Excel to find the price in the bond market (ie,PV)/which formula to use? (calculating the present value of a bond) FV = $1,000.00, Nper = 24 years, Coupon Interest rat
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Bond Amortization (Straight-Line Method) BFSC Financial Investment, Inc. a. Bond Face Value: $100,000 b. Contract Rate: 5% / year c. Length of Bond: 15 years d. Interest Payments per Year: 2 time
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Matt Jackson purchased a $1,000 corporate bond issued by Chevron Corporation. The annual interest rate for the bond is 4.95 percent. a. What is the annual interest amount for the Chevron bond? b. Si
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Last year, the yield on AAA-rated corporate bonds averaged \approx imately 5 percent; One year later, whereas this year the yield on these same bonds had climbed to about 6 percent because the Federal R
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A Treasury bond has a coupon rate of 6% per annum (the coupons are paid semiannually) and a semiannually compounded yield of 4% per annum. The bond matures in 18 months and the next coupon will be paid 6 months from now. Which number below is closest to t
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Mia wants to invest in Treasury bonds that have a par value of $20,000 and a coupon rate of 4.5%. The bonds have a 10-year maturity, and Mia requires a 6% return. How much should Mia pay for her bonds
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Oil Wells offers 6.5% coupon bonds with semiannual payments and a yield to maturity of 6.94%. The bonds mature in seven years. What is the market price per bond if the face value is $1,000? A. $989.70
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What are the advantages and disadvantages of inflated price method?
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Nike issued 20-year, 8% bonds with a par value of $700,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Nike received $748,524 in cash proceeds. Which of the following statements is true? a) Nike must pay $700,000 at maturit
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Suppose Apple has 45% of the U.S. market share for smartphones, followed by Samsung with 30%, LG with 9%, Motorola with 8%, HTC with 6%, and Nokia with 2%. What is the Herfindahl Index for the smartphone industry based on these numbers? Based on the Herfi
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A coupon bond paying semiannual interest is reported as having an ask price of 126% of its $1,000 par value. If the last interest payment was made one month ago and the coupon rate is 6%, what is the invoice price of the bond?
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The bonds of the Lange Corporation are perpetuities with a 10 percent coupon. Bonds of this type currently yield 8 percent, and their par value is $1,000. a. What is the price of the Lange bonds? b. Suppose interest rate levels rise to the point where s
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Construct some simple examples to illustrate your answers to the following: a. If interest rates rise, do bond prices rise or fall? b. If the bond yield is greater than the coupon, is the price of the
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