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Usimov [2.4K]
2 years ago
14

Cailin Corp issues 10,000 callable bonds with same coupon rate and years to maturity in part A, where coupon rate is 8%, maturit

y is 10 years, and the yield is 5%. The grace period for the call is 5 years and the call price of this bond is $1,000. What would be the current price of this callable bond
Business
1 answer:
lisabon 2012 [21]2 years ago
7 0

Answer:

$955.37 per bond

Explanation:

Callable bonds are generally worth less than normal bonds since the call option decreases the value of the bondholder while increases the value of the issuer. Bonds will only be called if the interest rate falls below a certain level and calling them is cheaper (form the issuer's point of view) than keep paying high interest rates.

market price of callable bonds:

  • PV of face value = $1,000 / (1 + 5%)¹⁰ = $613.91
  • PV of coupon payments = $80 x 7.7217 (PV annuity factor, 5%, 10 periods) = $617.74
  • Price of call option = [(1 + 5%)⁵ x $1,000] - $1,000 = $1,276.28 - $1,000 = $276.28

current market price of callable bonds = $613.91 + $617.74 - $276.28 = $955.37

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Answer:

Here is a sample of the most common marginalized groups:

GLBT.

Senior citizens.

Racial/Cultural minorities.

Military Combat Veterans.

Persons of below average intelligence.

Hearing, visually, and Physically Challenged Persons.

Persons with a serious and Persistent Mental Illness (SPMI)

Persons with Cognitive Impairments.

6 0
2 years ago
You have just received your paycheck from Chick-Fil-A. You go to the bank to deposit your check in the amount of $120.00 to your
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3 years ago
A project professional has just been assigned manager of a project to develop a new advertising campaign for an established prod
german

Answer:

<u>Establish project priorities</u>

Explanation:

<em>Remember</em>, we are told the project professional has been assigned to manage a project, therefore going by the guiding steps when defining a project, the next and second step he should take is to establish project priorities.

In other words, he should draft out what tasks should be done first, those for later, and so forth in other to successfully achieve/finish the project's objective.

4 0
3 years ago
Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $9,750,000, and a current st
astra-53 [7]

Answer:

a. $12.08 per share

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Current Earning per share  = Net Income ÷ Number of Common Shares Outstanding

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= $1.77

Current Price Earning ratio = Current stock price ÷  Current EPS

= $14.74 ÷ $1.77

= 8.33

Now Next year earning per share = $9,750,000 ×  1.25 ÷ 8,400,000 shares = $1.45

So, the next year stock price = $1.45 x 8.33

= $12.08 per share

3 0
3 years ago
John works part-time for a moving company and earns a total of $116 each weekend. A friend invites him to go on a cruise next we
adell [148]

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In the given case, John has two alternatives and if he chooses to go on the trip it would cost him the loss of $116 salary that he receives.

Thus the opportunity cost of going on the trip would be $116.

5 0
2 years ago
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