A firm issues five-year bonds with a coupon rate of 6.4%, paid semiannually. The credit spread for this firm's five-year debt is 0.8%. New five-year Treasury notes are being issued at par with a coupon rate of 3.3%. What should the price of the firm's outstanding five-year bonds be per $100 of face value? OA. $88.24 OB. $132.36 OC. $154.42 OD. $110.30
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- Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the companys permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of 1,000, an annual coupon interest rate of 6%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of 60 per share. Calculate the firms market value capital structure.A firm issues two-year bonds with a coupon rate of 6.9%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.2%. What should the price of the firm's outstanding two-year bonds be per $100 of face value? OA. $84.42 OB. $105.52 OC. $126.63 OD. $147.73 Res Printed Date:A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?
- A firm issues 2-year bonds with a coupon rate of 4.9%, paid semiannually. The credit spread for this firm's 2-year debt is 1.2%. New 2-year Treasury notes are being issued at par with a coupon rate of 5.2%. What should the price of the firm's outstanding 2-year bonds be if their face value is $1000? A. $4.80 B. $972.25 C. $777.80 D.A firm issues ten-year bonds with a coupon rate of 6%, paid semiannually. The credit spread for this firm's ten-year debt is 0.8%. New ten-year Treasury notes are being issued at par with a coupon rate of 3.4%. What should the price of the firm's outstanding ten-year bonds be per $100 of face value? OA. $91.66 OB. $114.58 OC. $137.49 OD. $160.41 UCCEEA firm issues 10-year bonds with a coupon rate of 4.5%, paid semiannually. The credit spread for this firm's 10-year debt is 1.2 %. New 10-year Treasury notes are being issued at par with a coupon rate of 5.3%. What should the price of the firm's outstanding 10-year bonds be if their face value is $1000? OA. $854.61 OB. $683.69 OC. $24.00 OD. $1,196.45
- 1. A bank quotes an interest rate of 14% per annum with quarterly compounding. What is the equivalent rate with (a) continuous compounding and (b) annual compounding? 2. What is meant by LIBOR and LIBID. Which is higher? 3. The 6-month and 1-year zero rates are both 10% per annum. For a bond that has a life of18 months and pays a coupon of 8% per annum (with semiannual payments and onehaving just been made), the yield is 10.4% per annum. What is the bond’s price? What isthe 18-month zero rate? All rates are quoted with semiannual compounding. 4. An investor receives $1,100 in one year in return for an investment of $1,000 now.Calculate the percentage return per annum with:(a) Annual compounding(b) Semiannual compoundingInterest Rates 97(c) Monthly compounding(d) Continuous compounding.5. Suppose that 6-month, 12-month, 18-month, 24-month, and 30-month zero rates are,respectively, 4%, 4.2%, 4.4%, 4.6%, and 4.8% per annum, with continuous compounding.Estimate the cash price of a bond…A bank has assets of $500,000,000 and equity of $40,000,000. The assets have an average duration of 5.5 years, and the liabilities have an average duration of 2.5 years. An 8-year fixed-rate T-bond with the same coupon as the fixed-rate on the swap has a duration of 6 years, and the duration of a floating-rate bond that reprices annually is one year. The bank wishes to hedge its balance sheet with swap contracts that have notional contracts of $100,000. What is the optimal number of swap contracts into which the bank should enter? 2,500 contracts. 2,760 contracts. 13,800 contracts. 3,200 contracts. None of the above.The 10-year Treasury rate is 2.15 percent, and a firm’s credit rating is BBB. The firm has had many bond issues in the past, and decides to raise $100 million by selling 10-year bonds. At present, 10-year BBB bonds are selling for 225 basis points above the 10-year Treasury rate. What is the cost of borrowing? a. 4.40% b. 2.15% c. 2.25% d. 2.38%
- Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 10%. The firm then enters into an interest rate swap where it pays SOFR and receives a fixed 5.2% on notional principal of $100 million. What is the firm's effective interest rate on its borrowing? Note: Enter value as positive amount. Round your answer to 1 decimal place. Effective interest rate %A corporate bond matures in five years. This bond’s credit spread over comparable maturity Treasury Bonds is 3.25%. Treasury bond yields are currently 2.125%, 4.375%, and 6.250% for 2-year, 5-year, 10-year maturity bonds, respectively. What is the cost of debt for the firm which issued the bond?Eastern Bank Limited (EBL) has issued a12% Semi-annual Corporate Bond of Tk. 1000 for 8 years. The YTM is 10%. Required: i. Market Price of Bond. ii. One year from now, investors has realized the bond when YTM has decreased to 8% and the reinvestment rate is 10%. What would be the realized compound yield?