Disney has just issued a 10-year bond to finance its digital strategy. The face value of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Disney has just issued a 10-year bond to finance its digital strategy. The face value of the bond is 1,000$. The bond is based in USA and pays coupon semi- annually. The annualized coupon rate is 2%. The current interest rate for this bond is 0.95% in semi- annual terms. (20 points) Please calculate: The PV of the bond a. b. If the bond is quoted in the market at 1,012$, will you recommend the purchase? c. Is the bond sold at discount, par or premium? d. If you expect the annual interest rates to fall by 0.5%, what would you recommend doing? Disney has just issued a 10-year bond to finance its digital strategy. The face value of the bond is 1,000$. The bond is based in USA and pays coupon semi- annually. The annualized coupon rate is 2%. The current interest rate for this bond is 0.95% in semi- annual terms. (20 points) Please calculate: The PV of the bond a. b. If the bond is quoted in the market at 1,012$, will you recommend the purchase? c. Is the bond sold at discount, par or premium? d. If you expect the annual interest rates to fall by 0.5%, what would you recommend doing?
Expert Answer:
Answer rating: 100% (QA)
SOLUTION a To calculate the present value PV of the bond we need to discount each of the semiannual coupon payments and the face value using the curre... View the full answer
Related Book For
Quantitative Analysis for Management
ISBN: 978-0132149112
11th Edition
Authors: Barry render, Ralph m. stair, Michael e. Hanna
Posted Date:
Students also viewed these finance questions
-
Assume for simplicity that these payments continue for 20 years and then cease. The interest rate is 4% . You plan to cover this obligation by investing in 5- and20-year maturity Treasury strips.(a)...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
1. Hannah is applying for a life policy on her girlfriend Sarahs life. The policy is $500,000 and carries a large premium. Hannah is the main earner, so she is concerned about not being able to pay...
-
The $1.6 Billion Mega-millions winning lottery ticket is based upon the total amount of cash received if the annuity option is taken. The cash prize is $913,700,000 which you get immediately. The...
-
Determine the expected diffraction angle for the first-order reflection from the (113) set of planes for FCC platinum when monochromatic radiation of wavelength 0.1542 nm is used.
-
With the observations on the strength (in pounds per square inch) of $2 \times 4$ pieces of lumber already set in $\mathrm{C} 1$, the sequence of choices and clicks produces an even more complete...
-
What the differences are between civil litigation and other types of litigation
-
Chicago Company' reported the following information at the end of the current year: Common stock ($8 par value; 35.000 shares outstanding)........... $280,000 Preferred stock, 10% ($ 15 par value;...
-
Dobbs is a June 2022 Supreme Court decision that held that the US Constitution does not confer a federal right to abortion, overturning long-standing Supreme Court jurisprudence. Dobbs does not...
-
Mr. M has been employed as an engineer by A Ltd., a company incorporated in Hong Kong. During the year ended 31 March 2019, Mr. M had the following income and expenditure. A monthly salary of...
-
Complete the following writing assignment: Analyze the attached 10_pages. Write about them, summarize what you read, and connect it to personal experiences. CHAPTER 15 Sexual Dysfunctions and...
-
If f(x) = x -7 x +7 find f'(x). Then find f'(5).
-
How could you use Descartes' Rule and the Fundamental Theorem of Algebra to predict the number of complex roots to a polynomial, as well as find the number of possible positive and negative real...
-
A pendulum with a length of 2.0m is pulled back until it makes an angle of 35.0 to the vertical. a. What is the pendulums height above equilibrium position? b. What is the maximum speed the pendulum...
-
Following your finalization of the preparation of Financial Statements of ABC PLC for the financial year ended 31 December 2021, you also have a task to undertake an analysis of these financial...
-
The following numbers are taken from the financial statements of Sherry Company for year ended Dec. 31, 2020. Revenues Expenses Net Income Assets Total Liabilities SE Equity 15,000 Net Cash Flows...
-
What role does the NLRB have as an administrative agency to provide overight in labor-management disagreements? Should the decisions of an administrative agency be enforceable through the federal...
-
For the following arrangements, discuss whether they are 'in substance' lease transactions, and thus fall under the ambit of IAS 17.
-
Use the F table in Appendix D to find the value of F for the upper 5% of the F distribution with (a) df1 = 5, df2 = 10 (b) df1 = 8, df2 = 7 (c) df1 = 3, df2 = 5 (d) df1 = 10, df2 = 4
-
After buying a computer system, Sim Thomas must decide whether to purchase (1) A complete maintenance (or service) policy at a cost of $500, which would cover all maintenance costs; (2) A partial...
-
Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for...
-
Nineteen immigrants to the U.S were asked how many years, to the nearest year, they have lived in the U.S. The data are as follows: 2; 5; 7; 2; 2; 10; 20; 15; 0; 7; 0; 20; 5; 12; 15; 12; 4; 5; 10. a....
-
How much time does it take to travel to work? Table 1.16 shows the mean commute time by state for workers at least 16 years old who are not working at home. Find the mean travel time, and round off...
-
Forbes magazine published data on the best small firms in 2012. These were firms which had been publicly traded for at least a year, have a stock price of at least \($5\) per share, and have reported...
Study smarter with the SolutionInn App