Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of
Question:
Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 7.4% with semiannual payments of $37, and a par value of $1,000. The price of each bond in the issue is $1,200.00. The bond issue is callable in 5 years at a call price of $1,074. What is the bond's current yield? Do not round intermediate calculations. Round your answer to two decimal places.
%
#4. Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%.
- What is the yield to maturity at a current market price of
- $842? Round your answer to two decimal places.
%
- $1,157? Round your answer to two decimal places.
%
- Would you pay $842 for each bond if you thought that a "fair" market interest rate for such bonds was 14%that is, if rd = 14%?
- You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
- You would buy the bond as long as the yield to maturity at this price is less than your required rate of return.
- You would buy the bond as long as the yield to maturity at this price equals your required rate of return.
- You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
- You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond.
#8. A stock's returns have the following distribution:
Demand for the Company's Products | Probability of this Demand Occurring | Rate of Return if this Demand Occurs |
Weak | 0.1 | (22%) |
Below average | 0.2 | (15) |
Average | 0.3 | 15 |
Above average | 0.3 | 30 |
Strong | 0.1 | 46 |
1.0 |
Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of variation:
Sharpe ratio:
Gapenski's Healthcare Finance An Introduction To Accounting And Financial Management
ISBN: 9781640551862
7th Edition
Authors: Kristin L. Reiter, Paula H. Song