Showing 71 to 80 of 5788 Questions
  • A bond has the following features: • Coupon rate of interest: 5 percent • Principal: $1,000 • Term to maturity: 10 years a. What will the holder receive when the bond matures? b. If the current rate of interest on comparable debt is 8 percent, what should be the price of this bond? Would you expect the firm to call this bond? Why?

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  • A bond speculator currently has positions in two separate corporate bond portfolios: a long holding in Portfolio 1 and a short holding in Portfolio 2. All the bonds have the same credit quality. Other relevant information on these positions includes:Treasury bond futures (based on $100,000 face value of 20-year T-bonds having an 8 percen

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    10
  • A bond with 15 years to maturity has a semiannual interest payment of $40. If the bond sells for its par value, what are the bond's current yield and yield to maturity?

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  • A bond with a coupon rate of 7% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the asked price for the bond on January 30 at 100:02. What is the invoice price of the bond? The coupon period has 182 days.

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    406
  • A bond with a par value of $1000 has a coupon rate of 7 percent and matures in 15 years. Using a spreadsheet program, graph its price versus different yields to maturity, ranging from 1 percent to 20 percent. Is the relationship between price and yield linear? Why? Semi-annual coupons = $35; number of periods = 15 x 2 = 30 A spreads

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  • A bond with an annual coupon rate of 4.8% sells for $970. What is the bond’s current yield?

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    819
  • A building has a cost of $500,000 and accumulated depreciation of $40,000. The current value of the building is estimated to be $120,000. The building is expected to generate net cash inflows of $15,000 per year for the next 30 years.(1) Determine whether the building is impaired and (2) If it is impaired, make the journal entry necessary

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  • A call option has an exercise price of $65 and matures in six months. The current stock price is $73, and the risk-free rate is 5 percent per year, compounded continuously. What is the price of the call if the standard deviation of the stock is 0 percent per year?

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    128
  • A call option is the right to buy stock at $50 a share. Currently the option has six months to expiration, the volatility of the stock (standard deviation) is 0.30, and the rate of interest is 10 percent (0.1 in Exhibit 20.2).a) What is the value of the option according to the Black-Scholes model if the price of the stock is $45, $50, or

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    181
  • A call option with X = $50 on a stock currently priced at S = $55 is selling for $10. Using a volatility estimate of s = .30, you find that N (d1) = .6 and N (d2) = .5. The risk-free interest rate is zero. Is the implied volatility based on the option price more or less than .30? Explain.

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