Financial statements ratios and the relevance of the ratios for benchmarking,
Analyze financial statements ratios and the relevance of the ratios for benchmarking,
Finance
The effective yield of the bond
A fixed 6% quarterly-pay coupon bond with 5.5 years to maturity is trading at 98.6 per 100 par. What is the effective yield of the bond?
Total return of the bond on the assumption
An investor is considering buying a bond from Company HelloWorld. The bond pays 12% semi-annual coupon, it has 15 years to maturity and the current price of this bond is $1,150. This bond is callable at the end of year 5 (the first and only call date). The call price of the bond is …
Annualized return
Suppose a portfolio manager is considering the purchase of a bond, a 12-year, 8% non-callable bond selling at $1050 per $1000 of par value. Assume also that the portfolio manager’s investment horizon is 5 years. The portfolio manager believes the reinvestment rate range can vary from 3% to 6% and the discount rate …
The total return on bond equivalent basis
Suppose that an investor has 8 years investment horizon. The investor is considering a 20-year semi-annual coupon bond selling at par and having a coupon rate of 10%. The investor expectations are as follows: The first 6 semi-annual coupon payments can be reinvested from the time of receipt to the end of the investment …
The value of the FRN
A $1000 par floating rate note pays a coupon rate of 180-day LIBOR plus a quoted margin of 1.5% semi-annually. Given that there is exactly 2 years to maturity, and the latest 180day LIBOR is 2.8%, and the discount margin is 1.0%, what is the value of the FRN at this point?
Fixed coupon callable bond
A 10-year, 8% semi-annual fixed coupon callable bond can be called after 5 years from issuance at a call price of 101. 2 years after its issuance, the price of the bond has dropped to 97 per 100 par. Calculate the yield-to-call at this point.
Talukdar’s theoretical stock price
1. The earnings, dividends, and stock price of Talukdar Technologies Inc. are expected to grow at 7 percent per year in the future. Talukdar’s last dividend was $2.00, the stock beta is 1.6, the risk-free rate is 9 percent, and the average return on the market is 13 percent. a. Compute Talukdar’s theoretical …
The bond’s yield to maturity
1. Remington, Inc. issued a new series of bonds on April 1, 2020. These non-callable bonds were sold at par, have a 9.25 percent coupon and mature in 25 years on March 31, 2045. Coupon payments are made on October 1 and April 1. Assume that you purchased an outstanding Remington bond on March …
The proper cash flow
Landover Construction Company’s most recent revenue was $4,124,000 with operating costs (exclusive of depreciation) of $1,176,300, depreciation expense of $245,000, and interest expense of $30,000. Landover’s tax rate is 35%. Both revenues and costs for next year are expected to rise each year by 5 percent with depreciation and interest expense to remain approximately the …
