Pablo Guere Chpt 14 acct241 Q 1‚3‚4‚13‚19‚21‚22 E 14-1‚ 14-4‚ 14-5‚ 14-10 P 4-6 (may1 to jan1 only) 1. (a) From what sources might a corporation obtain funds through long-term debt? (b) What is a bond indenture? What does it contain? (c) What is a mortgage? A) Bonds payable‚ long-term notes payable‚ mortgages payable‚ pension liabilities‚ and lease liabilities are examples of long- term liabilities. B) It is an agreement that often includes the amounts authorized to be issued‚ interest
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Chapter 6 Bond Valuation 6.5 Duration and Convexity Problem Given a 4-yr treasury bond with a face value of $1‚000‚ an annual coupon rate of 3.20%‚ which had a yield to maturity of 2.53%‚ this bond makes 2 semi-annual coupon payments. Thus has 8 periods until maturity and we are required to determine what the duration‚ modified duration‚ and convexity of this bond is‚ based on the Annual Percentage Rate (APR) and the Effective Annual Rate (EAR). Also‚ we are asked to explain an intuitive interpretation
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FUNDAMENTALS The interest rate or required return represents the cost of money. It is the compensation that a supplier of funds expects and a demander of funds must pay. Usually the term interest rate is applied to debt instruments such as bank loans or bonds‚ and the term required return is applied to equity investments‚ such as common stock‚ that give the investor an ownership stake in the issuer. In fact‚ the meaning of these two terms is quite similar because‚ in both cases‚ the supplier is compensated
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Compare and contrast the structure and bonding in Ionic‚ Covalent and Metallic species. Relate the structure and bonding to the properties of the species. Ionic bonding is usually formed between a metal and a non-metal‚ Covalent between two non-metals and Metallic between two metals. Ionic Bonding; Ionic bonds tend to form between metals whose atoms need to “loose” electrons to gain the nearest noble gas configuration and non-metals that need to gain electrons. These electrons are transferred
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The characteristic of a convertible bond The convertible bond is one kind of equity-linked bonds. The term of the bond entitles bondholder to convert bonds into shares of the company or another company in the same group‚ at an agreed-upon conversion price‚ among a fixed period. The reason why it is made in this form is that the issuer can benefit from four aspects as follow‚ (1) better terms. A convertible bond have a lower interest rate‚ less restrictive covenants or the subordination of bondholders’
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BONDS MARKET IN INDIA What are Bonds? A bond is a debt security in which the authorized issuer owes the holders a debt and‚ depending on the terms of the bond‚ is obliged to pay interest (the coupon) and/or to repay the principal at a later date‚ termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Thus a bond is like a loan: the issuer is the borrower (debtor)‚ the holder is the lender (creditor)‚ and the coupon is the interest. Bonds have a maturity
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RIL Bonds The Reliance Group has its businesses in the energy and materials value chain. The annual revenue of RIL is in excess of US$ 34 billion. RIL is a Fortune Global 500 company and is the largest private sector company in India. Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies‚ Reliance pursued a strategy of backward vertical integration - in polyester‚ fibre intermediates‚ plastics‚ petrochemicals‚
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Bond Practice Problems II 1. Seven years ago your firm issued $1‚000 par value bonds paying a 7% semi-annual coupon with 15 years to maturity. The bonds were originally issued at par value. a. What was the original yield to maturity on the bonds? They were issued at par…so the YTM = Coupon rate: 7% b. If the current price of the bonds is $875‚ what is the yield to maturity of the bonds TODAY? 1000 FV .07(1000)÷2= PMT (15-7)*2 = N -875 PV I/Y = 4.623*2 = 9.25% c. If the yield
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invest in bonds for the short-term or the long-term depends on your investment goals and time frames‚ the quantity of jeopardy you are willing to take and your tax status. When considering a bond investment strategy‚ keep in mind the importance of diversification. As a universal rule‚ it’s by no means a good idea to put all your assets and all your risk in a single asset class or investment. You will want to expand the risks within your bond investments by creating a portfolio of a number of bonds‚ each
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Boeing Bond Analysis Presented to Dr. ----- Prepared by Filipe Ferro October 9‚ 2012 Table of Contents Boeing Company 3 Bond Issue 3 Unsystematic Risk 4 Principal Repayment 4 Debt to Invested Capital 4 Debt to Equity 4 Current & Quick Ratios 5 Interest Repayment 5 Times Interest Earned 5 Credit Position 6 Competitor Analysis 6 General Dynamics 6 Northrop Grumman 7 Systematic Risk 7 Market Responsiveness 7 Duration 8 Modified Duration 9 Accuracy of Rating 9
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