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3. Assuming Smile Corp., issues a call notice to redeem the debenture bond issuances. This bond has still 4 years life before its maturity at a call price of 110-1/4. Hapi has still six (6) debenture bonds, and is now selling at 106-3/4. If Hapi exercise the call option: a. How much is the total amount she will be receiving? b. Compute for the yield to call. c. What is the capital gains yield?

3. Assuming Smile Corp., issues a call notice to redeem the debenture bond issuances. This bond has still 4 years life before its maturity at a call price of 110-1/4. Hapi has still six (6) debenture bonds, and is now selling at 106-3/4. If Hapi exercise the call option: a. How much is the total amount she will be receiving? b. Compute for the yield to call. c. What is the capital gains yield?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Smile Corp. Issued 16% p.a., 10-year Debenture bond, P6,000 face value, interest due every four (4) months. On October 1, Hapi purchased 20 bonds at par. On May 31, she sold 8 bonds to Honey at 105-3/4. Again on September 30, Hapi sold another 6 bonds to Sweet at 96-1/2. Required: 3. Assuming Smile Corp., issues a call notice to redeem the debenture bond issuances. This bond has still 4 years life before its maturity at a call price of 110-1/4. Hapi has still six (6) debenture bonds, and is now selling at 106-3/4. If Hapi exercise the call option: a. How much is the total amount she will be receiving? b. Compute for the yield to call. c. What is the capital gains yield?
Transcribed Image Text:Smile Corp. Issued 16% p.a., 10-year Debenture bond, P6,000 face value, interest due every four (4) months. On October 1, Hapi purchased 20 bonds at par. On May 31, she sold 8 bonds to Honey at 105-3/4. Again on September 30, Hapi sold another 6 bonds to Sweet at 96-1/2. Required: 3. Assuming Smile Corp., issues a call notice to redeem the debenture bond issuances. This bond has still 4 years life before its maturity at a call price of 110-1/4. Hapi has still six (6) debenture bonds, and is now selling at 106-3/4. If Hapi exercise the call option: a. How much is the total amount she will be receiving? b. Compute for the yield to call. c. What is the capital gains yield?
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