Questions from General Investment

Q: A $1,000 bond has a coupon rate of 10

A $1,000 bond has a coupon rate of 10 percent and matures after eight years. Interest rates are currently 7 percent. a) What will the price of this bond be if the interest is paid annually? b) What wi...

Q: A company has two bonds outstanding. The first matures after five

A company has two bonds outstanding. The first matures after five years and has a coupon rate of 8.25 percent. The second matures after ten years and has a coupon rate of 8.25 percent. Interest rates...

Q: A $1,000 zero coupon bond sells for $519

A $1,000 zero coupon bond sells for $519 and matures after five years. What is the current yield and the yield to maturity?

Q: Given the following information: XY Inc. 5% bond

Given the following information: XY Inc. 5% bond AB Inc. 14% bond Both bonds are for $1,000, mature in 20 years, and are rated AAA. a) What should be the current market price of each bond if the inter...

Q: a) A stock costs $900 and pays an annual $

a) A stock costs $900 and pays an annual $40 cash dividend. If you expect to sell the stock for $1,000 after five years, what is your anticipated return on the investment? b) A $1,000 bond has a 4 per...

Q: a) If a preferred stock pays an annual dividend of $

a) If a preferred stock pays an annual dividend of $6 and investors can earn 10 percent on alternative and comparable investments, what is the maximum price that should be paid for this stock? b) If t...

Q: What should be the prices of the following preferred stocks if comparable

What should be the prices of the following preferred stocks if comparable securities yield 6 percent, 8 percent, and 10 percent? a) MN Inc., $4 preferred ($100 par). b) CH Inc., $4 preferred ($100 par...

Q: Company X has the following bonds outstanding: /

Company X has the following bonds outstanding: Initially, both bonds sold at $1,000 with yields to maturity of 8 percent. a) After two years, the interest rate on comparable debt is 10 percent. What...

Q: When you purchase a bond, why do you have to pay

When you purchase a bond, why do you have to pay accrued interest?

Q: A high-yield bond has the following features:

A high-yield bond has the following features: a) If comparable yields are 12 percent, what should be the price of this bond? b) Would you expect the firm to call the bond if yields are 12 percent? c...