Day Advances 4. 870 760 960 840 Declines 880 990 790 910 Volume advancing(m) Volume declining (m) Yield on top-rated corporate bonds Yield on intermediate-grade corporate bonds 580 620 480 510 670 580 720 520 6.8% 6.7% 6.7% 6.6% 7.4% 7.4% 7.5% 7.6% The TRIN on day 2 is Multiple Choice 92 1.04

Day Advances 4. 870 760 960 840 Declines 880 990 790 910 Volume advancing(m) Volume declining (m) Yield on top-rated corporate bonds Yield on intermediate-grade corporate bonds 580 620 480 510 670 580 720 520 6.8% 6.7% 6.7% 6.6% 7.4% 7.4% 7.5% 7.6% The TRIN on day 2 is Multiple Choice 92 1.04

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

100%

Day
1
2.
870
4
Advances
760
960
840
910
Declines
880
990
790
Volume advancing(m)
Volume declining (m)
Yield on top-rated corporate bonds
Yield on intermediate-grade corporate bonds
580
620
480
510
670
580
6.8% 6.7% 6.7% 6.6%
7.4% 7.4% 7.5% 7.6%
720
520
The TRIN on day 2 is
Multiple Choice
92
1.04
55

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Bond Listing from Wall Street Journal Online 1 A Issuer Name CITIGROUP GENERAL ELECTRIC CAPITAL KRAFT FOODS BANK OF AMERICA ANHEUSER- BUSCH 2 Symbol C.HRY GE.HMX KFT.GX BAC.ICB BUD.ID COMCAST CORP CMCD.GC GOLDMAN SACHS GS.IAR 3 Coupon 8.500% 5.500% 5.375% 7.625% 5.375% 5.150% 5.375% GP BANK OF AMERICA BAC.IOP 4.500% BARCLAYS BANK BCS.GYR 5.000% PLC 4 Maturity May 2019 Jan 2020 Feb 2020 Jun 2019 Jan 2020 Mar 2020 Mar 2020 Apr 2019 Sept 2020 5 Rating Moody's/S&P/ Fitch A3/A/A+ Aa2/AA+/- - Baa2/BBB-/BBB - A2/A/A+ Baa2/BBB+/- - Baa1/BBB+/BBB+ A1/A/A+ A2/A/A+ Aa3/AA-/AA- 6 7 8 High Low Last Change 119.268 116.615 117.733 0.448 105.307 102.374 103.097 -0.028 9 106.081 101.999 103.411 0.687 112.847 0.283 113.172 111.839 104.693 104.061 104.526 -0.466 104.832 100.923 101.225 0.441 99.750 95.636 101.750 99.288 100.231 0.518 107.104 102.680 103.584 0.595 -0.592 96.642 Yield % 5.940 5.090 N/A 5.826 10 4.930 5.786 4.784 4.445 4.351
Alternative Financing Plans Vatican Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $6,000,000 $3,750,000 Issue preferred $2.50 stock, $25 par 4,500,000 Issue common stock, $20 par 6,000,000 3,750,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $3,000,000. Enter answers in dollars and cents, rounding to the nearest whole cent. Plan 1 $ X Earnings per share on common stock Plan 2 X Earnings per share on common stock
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Problem 6-2 Determinants of Interest Rates for Individual Securities (LG6-6) You are considering an investment in 30-year bonds issued by Moore Corporation. The bonds have no special covenants. The Wall Street Journal reports that 1-year T-bills are currently earning 2.00 percent. Your broker has determined the following information about economic activity and Moore Corporation bonds: Real risk-free rate= 0.60% Default risk premium = 1.90% Liquidity risk premium = 1.40% Maturity risk premium = 2.50% a. What is the inflation premium? (Round your answer to 2 decimal places.) Expected IP %
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Exercise 10-5 (Algo) Straight-Line: Recording bond issuance and discount amortization LO P2 Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $90,000 and semiannual interest payments. Semiannual Period-End (0) January 1, issuance (1) June 30, first payment (2) December 31, second payment Unamortized Discount $ 6,533 5,716 4,899 Carrying Value $ 83,467 84,284 85,101 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on January 1. (b) The first interest payment on June 30. (c) The second interest payment on December 31. View transaction list Journal entry worksheet 1 2 3 Record the issuance of the bonds on January 1. Note: Enter debits before credits. Date January 01 General Journal Debit Credit
10-8.5% bonds sold at OMR 100 less cost of flotation at OMR 5 and cost of underwriting commission charges at OMR 2.500. If the firm pays tax at a rate of 35%, what is the cost of debt after tax? a. 2.97% b. 5.52% c. 5.97% d. 3.21% Clear my choice

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