How to compute coupon rate
[DOC File]Soln Ch 13 Bond prices - Home | York University
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Compute the interest rate. (iii) Realized compound yield is 4.166% (semiannually), or 8.33% annual bond equivalent yield. To obtain this value, first calculate the future value of reinvested coupons. There will be 6 payments of $35 each, reinvested semiannually at a per period rate of 3%: PV = 0; PMT = $35; n = 6; i = 3%. Compute FV = $226.39. The bond will be selling at par value of $1,000 in ...
[DOC File]Chapter 14 Business Valuations - Yola
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Compute the expected valuation of the company, if: (a) The current level of dividend is expected to continue into the foreseeable future, or (b) The dividend is expected to grow at a rate of 4% pa into the foreseeable future. Solution: Ke = 12% + 2% = 14%; D0 = $250,000; g = 4% (a) (b) 2.3.3 Example 5. A company has the following financial information available: Share capital in issue: 4 ...
[DOC File]Chapter 10
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a. Compute the anticipated value of the dividends for the next three years. That is, compute D1, D2, and D3; for example, D1 is $2.10 ($2.00 × 1.05). b. Discount each of these dividends back to the present at a discount rate of 12 percent and then sum them. c. Compute the price of the stock at …
[DOC File]Quantitative Problem Chapter 3
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Compute PV : PV $6,079,058.25 3. Consider a bond with a 7% annual coupon and a face value of $1,000. Complete the following table: Years to Maturity Discount Rate Current Price 3 5 3 7 6 7 9 7 9 9 What relationship do you observe between yield to maturity and the current market value? Solution: Years to Maturity Yield to Maturity Current Price 3 5 $1,054.46 3 7 $1,000.00 6 7 $1,000.00 9 5 ...
[DOC File]Answers to Text Discussion Questions
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4% Coupon rate, 25 year maturity 10.4912 (Table 13-7) Select the second bond. c) 12% Market rate of interest. Duration. 8% Coupon rate, 20 year maturity 8.9390 (Table 13-6) 12% Coupon rate, 25 year maturity 8.7844 (Table 13-7) Select the first bond. This bond has the longer duration, even though it has the shorter maturity. Zero-coupon bond and duration. 8. A 30-year, $1,000 par value zero ...
Chapter 04
A three-year bond has 8.0% coupon rate and face value of $1000. If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments. a. $857.96 B. $949.24c. $1057.54d. $1000.00
[DOC File]Soln Ch 13 Bond prices
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Compute the interest rate. (iii) Realized compound yield is 4.166% (semiannually), or 8.332% annual bond equivalent yield. To obtain this value, first find the future value (FV) of reinvested coupons and principal. There will be six payments of $35 each, reinvested semiannually at of 3% per period. On a financial calculator, enter: PV = 0; PMT = $35; n = 6; i = 3%. Compute: FV = $226.39. Three ...
[DOCX File]NYU Stern School of Business | Full-time MBA, Part-time ...
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Lipscott Inc. is a publicly traded company that has $100 million in bank loan on its books, with a stated interest rate of 3% and $150 million in publicly traded bonds, with a coupon rate of 3.6%. The company currently has a bond rating of BBB, with a default spread of 1.5% over the risk free rate. If the current T.Bill rate is 1%, the ten-year T.Bond rate is 3.5% and the marginal tax rate is ...
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