Security: AAA Corporate AA Corporate A Corporate BBB Corporate BB Corporate Yield (%): 5.6 5.7 6...
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Security: |
AAA Corporate |
AA Corporate |
A Corporate |
BBB Corporate |
BB Corporate |
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Yield (%): |
5.6 |
5.7 |
6.1 |
6.4 |
7.0 |
A mining company needs to raise $100 million in order to begin open-pit mining of a coal seam. The company will fund this by issuing 30-year bonds with a face value of $1,000 and a coupon rate of 6.5%, paid annually. The above table shows the yield to maturity for similar 30-year corporate bonds of different ratings. If the company's bonds are rated A, what will be their selling price?
Homework Answers
If the company's bonds are rated A, what will be their selling price?
=6.5%*1000/6.1%*(1-1/1.061^30)+1000/1.061^30
=$1,054.48
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Security: AAA Corporate AA Corporate A Corporate BBB Corporate BB Corporate Yield (%): 5.6 5.7 6...
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HMK Enterprises would like to raise $14 million to invest in capital expenditures. The company plans...
HMK Enterprises would like to raise $14 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1,000 and a coupon rate of 3.5% (annual
payments). The following table summarizes the yield to maturity
for five-year (annual-pay) coupon corporate bonds of various
ratings.
Rating
AAA
AA
A
BBB
BB
YTM (%)
3.03.0
3.13.1
3.53.5
3.93.9
4.34.3
a. Assuming the bonds will be rated AA, what will the price of
the AA-rated bonds...
HMK Enterprises would like to raise $10 million to invest in capital expenditures. The company plans...
HMK Enterprises would like to raise $10 million to invest in
capital expenditures. The company plans to issue 5-year bonds with
a face value of $1,000 and a coupon rate of 6.52% (annual
payments). The following table summarizes the yield to maturity for
5-year (annual-payment) coupon corporate bonds of various
ratings:
a. Assuming the bonds will be rated AA, what will be the price
of the bonds? (5 marks)
a. $856.32
b. $987.45
c. $999.66
d. $1,008.77
e. $1,019.88
b....
Thank you! Problem 6-30 A BBB-rated corporate bond has a yield to maturity of 8.2%. A...
Thank you!
Problem 6-30 A BBB-rated corporate bond has a yield to maturity of 8.2%. A U.S. Treasury security has a yield to maturity of 6.5%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at a rate of 7% and have five years to maturity. Note: assume a $1,000 face value. Complete the stata below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you...
25) Luther Industries needs to raise $25 million to fund a new office complex. The company...
25) Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon rate of 6.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: 25) Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon...
19) curity: AAA Corporate 56 AA Corporate A Corporate BBB Corporate BB Corporate ield (%): A mining company needs to raise $100 million in order to begin open-pit mining of a coal seam. The company will fund this by issuing 30-year bonds with a face value of $1,000 and a coupon rate of 6.5%, paid annually. The above table shows the yield to maturity for similar 30-year corporate bonds of different ratings. If the company's bonds are rated A, what...
QUESTION 4 Consider the following information regarding corporate bonds: Rating AAA AA A T IAA BBB BB CCC Average Default Rate 0.0% 0.0% 0.296 0,496 2.196 5.296 9.996 Recession Default Rate 0.096 1.09 3.0% 3.096 8.0% 16.096 43.096 Average Beta 0.05 0.05 0.05 0.10 0.17 0.26 10.31 Equity Debt Rating BBB Company Market Capitalisation Total Enterprise Value ($mm) ($mm) Taggart $4,500 8,000 Transcontinental Rearden Metal $3,800 7.200 Wyatt Oil $2,400 3,800 Nielson Motors $1,500 4,400 Your estimate of the asset...
A BBB-rated corporate bond has a yield to maturity of 7.9%. AU.S. Treasury security has a yield to maturity of 6.0%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semi-annual coupons at a rate of 6.4% and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the Treasury bond? b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate...
HMK Enterprises would like to raise $14 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1,000 and a coupon rate of 3.5% (annual
payments). The following table summarizes the yield to maturity
for five-year (annual-pay) coupon corporate bonds of various
ratings.
Rating
AAA
AA
A
BBB
BB
YTM (%)
3.03.0
3.13.1
3.53.5
3.93.9
4.34.3
a. Assuming the bonds will be rated AA, what will the price of
the AA-rated bonds...
HMK Enterprises would like to raise $10 million to invest in
capital expenditures. The company plans to issue 5-year bonds with
a face value of $1,000 and a coupon rate of 6.52% (annual
payments). The following table summarizes the yield to maturity for
5-year (annual-payment) coupon corporate bonds of various
ratings:
a. Assuming the bonds will be rated AA, what will be the price
of the bonds? (5 marks)
a. $856.32
b. $987.45
c. $999.66
d. $1,008.77
e. $1,019.88
b....
Thank you!
Problem 6-30 A BBB-rated corporate bond has a yield to maturity of 8.2%. A U.S. Treasury security has a yield to maturity of 6.5%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at a rate of 7% and have five years to maturity. Note: assume a $1,000 face value. Complete the stata below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you...
25) Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon rate of 6.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: 25) Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon...
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