Questions from Corporate Finance

Q: A zero coupon bond has a par value of $1,

A zero coupon bond has a par value of $1,000 and will mature in eight years. a . Calculate the current price of this bond if the market yield is: i) 7.75 percent; ii) 5.25 percent. b . In each case, c...

Q: A bond with semi‐annual coupons at a rate of 10

A bond with semi‐annual coupons at a rate of 10 percent will mature in one year. If the bond’s price is $1,010, use the trial‐and‐error method to find the YTM. Check your answer by using a financial c...

Q: Sapna would like to receive a real return of 5 percent per

Sapna would like to receive a real return of 5 percent per year on a bond investment at a time when the expected inflation rate is 2.5 percent. How much would she be willing to pay for a bond maturing...

Q: The Slice & Dice Investment Co. needs some help understanding the

The Slice & Dice Investment Co. needs some help understanding the intricacies of bond pricing. It has observed the following prices for zero coupon bonds that have no risk of default: a . How much...

Q: Bower is a Canadian investor. He noticed that the euro spot

Bower is a Canadian investor. He noticed that the euro spot rate is currently quoted at C$1.4768 pereuro. The European interest rate is 6 percent on one‐year T‐bills, and the one‐year interest rate in...

Q: A bond that matures in 10 years is callable in three years

A bond that matures in 10 years is callable in three years at a call price of $1,025. The bond has a semiannual coupon rate of 8 percent. If the YTM is 7.3 percent and the YTC is 6.92 percent, what is...

Q: A 12‐year, 7.5‐percent bond is

A 12‐year, 7.5‐percent bond is callable in four years at a call price of $1,045. If the bond pays semi‐annual coupons and is selling for $1,038, what is the YTM and YTC of the bond? Is this bond likel...

Q: A firm borrowed $3 million and paid 10 percent interest this

A firm borrowed $3 million and paid 10 percent interest this year. It also paid a dividend of $1 per share on 500,000 shares outstanding. What is the firm ’ s cash flow from financing?

Q: Demonstrate how to solve a typical retirement problem.

Demonstrate how to solve a typical retirement problem.

Q: Randy ’s Rowboats Ltd. purchased and began to use its first

Randy ’s Rowboats Ltd. purchased and began to use its first six rowboats for a total cost of $2,400. Randy believes the boats can be used for four years, providing the company with equal value each ye...