1. (Bond valuation) Michael Motors’ bonds have 10 years remaining to maturity. Interest is paid annually‚ the bonds have a $1000 par value and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 percent. What is the current market price of these bonds? Cash flow = 8% of 1‚000 = 80 YTM or interest rate n = 10 i = 9(%) PMT = 80 FV = 1000 PV = solve PV=935.82 2. (Valuation a preferred stock) Susie’s Pet Supplies issued preferred stock with a state dividend of
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securities‚ mostly in the form of bonds. These markets are important source of funds‚ especially in a developing economy like India. India debt market is one of the largest in Asia. Like all other countries‚ debt market in India is also considered a useful substitute to banking channels for finance. The most distinguishing feature of the debt instruments of Indian debt market is that the return is fixed. This means‚ returns are almost risk-free. This fixed return on the bond is often termed as the ’coupon
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dollar? Think of the kind of business they are in. * currency match or mismatch? Should they be issuing the debt if they go to the debt bond? In US dollar denomination? Or some other denominations? * issue in domestic‚ foreign‚ or Euromarkets? Foreign bond market : a market place other than Eurobond market. Foreign bond market is regulated market Euro bond market( in Macau/ Bahamas …) is an unregulated market. • Tax-saving • Issuing costs are less • Anonymity – no one knows who owns this
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9: Woodside Petroleum Limited is about to raise additional short-term funding to meet its funding needs over the next three-month planning period. It is considering issuing commercial bills or promissory notes. (a) What is a promissory note? Identify and briefly explain the roles of the parties to a P-note issue. (b) What are the main differences between P-notes and commercial bills of exchange? A promissory note‚ which typically has a maturity of 90 days‚ is described as ‘an unconditional promise
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Week 4 Homework Solutions: Problem Set 4 1. Determining Profit or Loss from an Investment. Three years ago‚ you purchased 150 shares of IBM stock for $88 a share. Today‚ you sold your IBM stock for $103 a share. For this problem‚ ignore commissions that would be charged to buy and sell your IBM shares. a. What is the amount of profit you earned on each share of IBM stock? The profit on each share of IBM stock was $15. $103 priced when each share was sold‚ $88 priced when each
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into capital the company shall be exempted from its debts and also‚ given the increase of its capital‚ be reinforced in the markets. There are three main methods of converting liabilities/debt to capital4. Firstly the conversion of convertible bonds‚ which the company has
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these long term liabilities consist of bonds‚ mortgages‚ capital leases‚ as well as other types of debt. Bonds are one type of long-term liability‚ which are traditionally valued at the present value of the bonds expected future cash flows‚ which are made up of both interest and principal. Bonds can be issued at face value‚ which is typically referred to as par in the investment community‚ or they are issued at a discount or premium. In the event bonds are issued at par‚ the company records
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an essential key in the bond market. The Confederate Treasure was selling bonds to the citizen‚ and this was a available capital for the south but they need to survive and see Europe like a new market. The south has a idea to use that product for collect back bonds and the invests they know that the demand of that product and interest increase. The south started selling bonds and financial centers of Europe. Airline company has a key of success a “I think its Cartamo Bonds”‚ they create value‚ and
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10‚ 2004 Introduction The bond market in Pakistan is comprised of debt and debt like securities issued by a) the Government; b) statutory corporations; and c) corporate entities. As of June 30th‚ 2003‚ the size of the Pakistan’s bond market was approximately Rs. 1‚892 billion equivalent to USD 33billion. The bond market is clearly dominated by the Government‚ which accounted for Rs.1‚852 billion (or 98%) of total bonds outstanding as of June 30th‚ 2003 followed by corporate
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7% ) (1.017)^t=2.193 t= 46.584 (月) 5. Even though most corporate bonds in the United States make coupon payments semiannually‚ bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of $1‚000‚ 25 years to maturity‚ and a coupon rate of 6.4 percent paid annually. If the yield to maturity is 7.5 percent‚ what is the current price of the bond? A: C=1000*6.4%= 64 bond
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