perpetual bond is currently selling for RS. 95/-. The coupon rate of interest is 13.5%. The approximate discount rate is 15%. The value of the bond and the YTM is: (a) Rs. 90/- and 14.2% Value is (13.5*15%=90) and YTM is ((13.5/95)*100=14.21%) (b) Rs. 100/- and 13.5% (c) Rs. 90 and 15% (d) Rs. 90/- and 13.5% 902. In 2001‚ Meridian Ltd. has issued bonds of Rs. 10‚000/-each due in 2011 with a 14% per annum coupon rate payable at the end of each year during the life of the bond. If the required
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BOND PROBLEM SOLUTIONS 1. Six years ago‚ The Corzine Company sold a 20-year bond issue with a 14 percent annual coupon rate and a 9 percent call premium. Today‚ Corzine called the bonds. The bonds originally were sold at their face value of $1‚000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price. PV = 1000; N = 6; PMT = 140; FV = 1090; CPT I/Y I/Y = 15.02% 2. You just purchased
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future value of bonds‚ managers can make sound decisions about their potential strengths and weaknesses as investments. Answer the following questions in this week’s Discussion 2 thread: 1. What terms (or inputs) are needed to calculate yield to maturity (YTM)? How does this compare to calculating yield to call (YTC)? To calculate the YTM you will need to use Annual Interest‚ Par value‚ Market Price and the number of years to maturity.The yield to maturity is the bond’s promised rate of return
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focuses on following issues: The importance in bond and stock valuation; The capital structure of the company; and How they effects to the capital budgeting decisions of the company. - Swan- Davis Inc.‚ (SDI) manufactures equipment for sale to large contractors‚ the company was found in 1976 and it went to the public in 1980 at its shares value risen from $1 to $15 since it enter to the market. - The financial statements for the past three years show a decline trend in both the operation and
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Introduction In recent years‚ the issue of efficiently mobilizing capital has become the concern of all companies. There are some ways of doing this: borrowing from the banks‚ issuing stocks or issuing bonds. However‚ when the interest rate of borrowing from banks is very high due to high inflation‚ together with the stock market is quite instable; calling for capital from bond market is much more preferred by investors. In the context of this report‚ some major points regarding the bond market in Vietnam are
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Bond Market Power: The reasons behind James Carville ’s quote stating that if he would want to be reincarnated as the Bond Market as appose to a political figure or religious leader (Ferguson‚ N‚ 2008) is clear‚ the Bond market since its inception over 800 years ago has been the most influential financial instrument throughout history. Its longevity and power far surpasses any leader. It affects the outcome of wars‚ the success and failures of even the largest economies and also touches the lives
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INSTITUTE FOR FINANCIAL AND ECONOMIC MANAGEMENT REGIONAL WORKSHOP ON MONEY MARKET DEVELOPMENT AND TECHNIQUES OF SECURITIES TRADING-LAGOS‚ NIGERIA MARCH 4-14 2008 THE BOND MARKET IN GHANA-CHALLENGES FOR ITS DEVELOPMENT A. Introduction A bond has been defined as a debt (loan) instrument which requires the issuer to repay the investor the amount borrowed with interest over a predetermined period of time. Bonds can be callable‚ redeemable‚ convertible‚ extendable or retractable. They may
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10 Bond Prices and Yields 1. a. Catastrophe bond: Typically issued by an insurance company. They are similar to an insurance policy in that the investor receives coupons and par value‚ but takes a loss in part or all of the principal if a major insurance claim is filed against the issuer. This is provided in exchange for higher than normal coupons. b. Eurobond: They are bonds issued in the currency of one country but sold in other national markets. c. Zero-coupon bond: Zero-coupon bonds are
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objective of our report is find the weak regulatory framework‚ supply-side constraints such as a lack of the benchmark bonds‚ demand-side constraints such as the limited investor base‚ a lack of intermediaries with expertise in debt products‚ a lack of confidence in corporate borrowers‚ market distortions which are caused by the National Savings Scheme (NSS) offering above-market returns; and A lack of interest from private companies‚ including financial intermediaries and large business‚ In launching
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Finance journal homepage: www.elsevier.com/locate/jbf The impact of bond rating changes on corporate bond prices: New evidence from the over-the-counter market Anthony D. May * Price College of Business‚ University of Oklahoma‚ 307 West Brooks‚ Norman‚ OK 73019‚ USA a r t i c l e i n f o a b s t r a c t I study the information content of bond ratings changes using daily corporate bond data from TRACE. Abnormal bond returns over a two-day event window that includes the downgrade (upgrade)
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