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Finance
An investor must choose between two bonds: Bond X pays $95 annual interest and has a market value of $900. It has 10 years to maturity. Bond Z pays $95 annual interest and has a market value of $920. It has two years to maturity. a. Compute the current yield on both bonds. b. Which bond should he select based on your answer to part a? c. A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on Bond X is 11.21 percent. What is the approximate yield to maturity on Bond Z? d. Has your answer changed between parts b and c of this question in terms of which bond to select?
Finance
Your grandfather has offered you a choice of one of the three following alternatives: $7,500 now; $2,200
a year for nine years; or $31,000 at the end of nine years. Assuming you could earn 10 percent annually,
which alternative should you choose? If you could earn 11 percent annually, would you still choose the
same alternative?
a year for nine years; or $31,000 at the end of nine years. Assuming you could earn 10 percent annually,
which alternative should you choose? If you could earn 11 percent annually, would you still choose the
same alternative?
Finance
Did the tools that the Egyptian government uses to finance the deficit are efficient?
Finance
(a) Your company’s current ratio is 0.5x, while your competitor’s current ratio is 1.5x. Both
firms want to "window dress" the coming end-of-year financial statements. As part of
the window dressing strategy, each firm will double its current liabilities by adding
short-term debt and placing the funds obtained in the cash account. Describe the actual
results of these transactions?
(b) What would be the effect if a company increases its debt ratio, but leaves its operating
income (EBIT) and total assets unchanged?
(c) A fire has destroyed a large percentage of the financial records of the Sunlight Inc. You
have the task of piecing together information in order to release a financial report. You
have found the return on equity to be 18 percent. If sales were RM4 million, the debt
ratio was 0.40, and total liabilities were RM2 million, what was the return on assets
(ROA)?
firms want to "window dress" the coming end-of-year financial statements. As part of
the window dressing strategy, each firm will double its current liabilities by adding
short-term debt and placing the funds obtained in the cash account. Describe the actual
results of these transactions?
(b) What would be the effect if a company increases its debt ratio, but leaves its operating
income (EBIT) and total assets unchanged?
(c) A fire has destroyed a large percentage of the financial records of the Sunlight Inc. You
have the task of piecing together information in order to release a financial report. You
have found the return on equity to be 18 percent. If sales were RM4 million, the debt
ratio was 0.40, and total liabilities were RM2 million, what was the return on assets
(ROA)?
Finance
You are considering an investment in a 40-year security. The security will pay $25 a year at
the end of each of the first three years. The security will then pay $30 a year at the end of
each of the next 20 years. The nominal interest rate is assumed to be 8 percent, and the
current price (present value) of the security is $360.39. Given this information, what is the
equal annual payment to be received from Year 24 through Year 40 (i.e., for 17 years)?
the end of each of the first three years. The security will then pay $30 a year at the end of
each of the next 20 years. The nominal interest rate is assumed to be 8 percent, and the
current price (present value) of the security is $360.39. Given this information, what is the
equal annual payment to be received from Year 24 through Year 40 (i.e., for 17 years)?
Finance
To expand its operation, Sunbeam Ltd. has applied to the Lion Bank for a 3-year, $3,500,000
loan. Prepare a loan amortization table assuming 10 percent rate of interest.
loan. Prepare a loan amortization table assuming 10 percent rate of interest.
Finance
A lawsuit has been filed against the company by a competitor, and the potential loss
has increased risk, which is reflected in the company’s beta, increasing it to 1.6. What
is the estimated price of the stock following the filing of the lawsuit.
has increased risk, which is reflected in the company’s beta, increasing it to 1.6. What
is the estimated price of the stock following the filing of the lawsuit.
Finance
Barracuda Inc., has a beta of 1.40, the annual risk free rate of interest is currently 10
percent, and the required return on the market portfolio is 16 percent. The firm
estimates that its future dividends will continue to increase at an annual compound rate
consistent with that experienced over the 2009–2012 period.
Year Dividend($)
2009 2.70
2010 2.95
2011 3.25
2012 3.40
(a) Estimate the value of Barracuda Inc., stock.
percent, and the required return on the market portfolio is 16 percent. The firm
estimates that its future dividends will continue to increase at an annual compound rate
consistent with that experienced over the 2009–2012 period.
Year Dividend($)
2009 2.70
2010 2.95
2011 3.25
2012 3.40
(a) Estimate the value of Barracuda Inc., stock.
Finance
A corporate bond with $1000 maturity value carries a 7.5% coupon rate. It currently makes
interest payments semi-annually.
interest payments semi-annually.
Finance
a) A corporate bond with RM1000 maturity value carries a 7.5% coupon rate. It currently
makes interest payments semi-annually.
(i) This 12-year bond currently sells for RM961.88. What is the rate of return on this
bond?
(ii) If the bond sold for RM1,030.32, what is the rate of return on this bond?
makes interest payments semi-annually.
(i) This 12-year bond currently sells for RM961.88. What is the rate of return on this
bond?
(ii) If the bond sold for RM1,030.32, what is the rate of return on this bond?
