20-year, 10% annual coupon, callable convertible bond will sell at its $1,000 par value; straight-debt issue would require a 12% coupon. Call the bonds when conversion value > $1,200. Po = $10; Do = $0.74; g = 10%. Conversion ratio = CR = 80 shares. What is the floor value at year 5? A$864 B)$1250 C) $1288 D) $1195 E) $1550 O A OB OC OD O E

20-year, 10% annual coupon, callable convertible bond will sell at its $1,000 par value; straight-debt issue would require a 12% coupon. Call the bonds when conversion value > $1,200. Po = $10; Do = $0.74; g = 10%. Conversion ratio = CR = 80 shares. What is the floor value at year 5? A$864 B)$1250 C) $1288 D) $1195 E) $1550 O A OB OC OD O E

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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N = ?, I/Y = ?, PV = ?, PMT = ?, FV= ? %3D GAT, Inc. has issued a $1,000 par 4% coupon bond that is to mature in 18 years. If your required rate of return is 6.5%, what price would you be willing to pay for the bond?
7. Calculate the price of a $1,000 bond, offering a 6% coupon payment with 20 years left to maturity and a market interest rate of 7%. (Assume interest payments are semiannual.) Is this a discount or premium bond?Price: ___________Type ___________ 8.On March 24, 2020, the Dow Jones Industrial Average opened at $18,591.93 and closed at $20,704.91. What was the daily return that day, and what was the effective annual rate return (in percent) of the stock market that day?Daily Return: __________% EAR:_________ % 9. Financial analysts forecast GDY Inc.’s growth for the future to be 8%. GDY's recent annual dividend was $6.00. What is the value of GDY stock when the required return is 11%?Stock Value: $___________________
A firm’s bonds have a maturity of 26 years with a $1,000 face value, a 9 percent semiannual coupon, are callable in 5 years at $1,080, and currently sell at a price of $1,163. What is their yield to call (YTC)? a. 9.00% b. 7.56% c. 6.51% d. 5.25% e. 7.65%
A firm’s bonds have a maturity of 18 years with a $1,000 face value, a 13 percent semiannual coupon, are callable in 4 years at $1,055, and currently sell at a price of $1,156. What is their yield to maturity (YTM)? a. 8.33% b. 9.40% c. 13.00% d. 10.99% e. 11.08%
Determine the market price of a 15-year, 4.75%, $200,000 coupon bond when the market interest rate is 5.15%.
Adventureland Corporation offers 5 percent coupon bonds with semiannual payments and a yield to maturity of 5 percent. The bonds mature in 10 years. What is the market price per bond if the face value is $1,000? O $318.75 O $631.25 O $1000.00 O $1611.25 O $1377.68
A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 7 years at $1,064.47, and currently sell at a price of $1,119.43. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. YTM: YTC: % -Select- v % What return should investors expect to earn on these bonds? I. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. II. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. III. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. IV. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM.
A 30-year, 8% semiannual coupon, $1,000 par value bond is selling for $1313.95 with an 5% yield to maturity. It can be called after 5 years at $1,250. What return would you earn when it's called? (please write down financial calculator registrars and your final answer clearly)
PGT's P1,000 par value bonds currently sell for P798.50. The coupon rate is 10% paid quarterly. If the bonds have 5 yrs before maturity, what is the approximate YTM? answer with full solution
Meacham Enterprises semi-annual bonds currently sell for $1.280 and have a par value of $1,000. They pay a 567.5 coupon every 6 months and have a 15-year maturity, but they can be called in 5 years at $1,150. What is their yield.o.call(XTC Edit Format Table 12pt Paragraph B I UA 16 5 M M
NUMERICAL QUESTION: Suppose that an investor is considering the purchase of a stock or a convertible bond of COMPANY S. The stock of the company can be purchased at €20. The following information is for the convertible bond. The bond has a face value of €1,000, an annual coupon rate of 4% (coupons are paid every six months) and a maturity of 3 years. Similar bonds are selling to yield 12% annually. The current market price of the convertible bond is €920. The Time left 1:11:10 ratio is 45. 1. What is the straight value of that bond? 2. What is the minimum value of the convertible bond? 3. Assume that the investor decided to purchase the convertible bond and that 2 months later, the price of the stock fell to €16. What is the return to the investor from having bought the convertible bond? Remember to input your answer without the % sign. For instance, an answer equal to 1.52% should be entered as 1.52.
ACB Products has a bond issue outstanding with 8 years remaining to maturity, a coupon rate of 10 percent with interest paid annually, and a par value of $1,000. If the current market price of the bond issue is $814.45, what is the yield to maturity, rd. Question 6 Select one: a. 14% b. 16% c. 12% d. 15% e. 13%If you think you can sell an asset for $15,000 in eight (8) years and you think the appropriate discount rate is 5%, how much would you be willing to pay for the asset today? Question 7 Select one: a. $15,000 b. $10,153 c. $11,236 d. $15,771.00 e. None of the above

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