The problems below illustrate stocks or bonds. Using the important terms related to stocks and bonds, answer the following problems completely. a. A land developer declared a dividend of P5,000,000 for its common stock. Suppose there are 100,000 shares, how much is the dividend per share? b. Find the amount of semi-annual coupon for a P300,000 bonds which pays 6.5% convertible semi-annually for its coupons. c. A certain company gave out P50 dividend per share for its common stock. The market value of the stock is P125. Determine the stock yield ratio. d. What is the current yield of a bond whose face value is P15,000 and pays an annual interest of 6.5% if purchased at face value at P13,500?

The problems below illustrate stocks or bonds. Using the important terms related to stocks and bonds, answer the following problems completely. a. A land developer declared a dividend of P5,000,000 for its common stock. Suppose there are 100,000 shares, how much is the dividend per share? b. Find the amount of semi-annual coupon for a P300,000 bonds which pays 6.5% convertible semi-annually for its coupons. c. A certain company gave out P50 dividend per share for its common stock. The market value of the stock is P125. Determine the stock yield ratio. d. What is the current yield of a bond whose face value is P15,000 and pays an annual interest of 6.5% if purchased at face value at P13,500?

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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Similar questions

Michalleti Marketing Consulting Ltd issued Gh¢500million of zero-coupon bonds with ex-interest of Gh¢120, due for repayment in 5years time at par. Its current market price is Gh¢105. What is the company’s cost of debt capital? plZ help me sir urgently
The price of an American call on a non-dividend-paying stock is $4. The stock price is $31, the strike price is $30, and the expiration date is in 3 months. The risk-free interest rate is 8%. The upper and lower bounds for the price of an American put on the same stock with the same strike price and expiration date is $3.00 and $2.41, respectively. Explain carefully the arbitrage opportunities if the American put price is greater than the calculated upper bound.
Suppose you own a convertible bond that has a conversion ratio equal to 62. Each convertible bond has a face value equal to $1,000. The current market value of the company's common stock is $16, and the bond is selling for $1,042. If you want to liquidate your position today because you need money to pay your rent, should you sell the bond or should you convert the bond into common stock and then sell the stock? Explain your answer. Round your answers to the nearest dollar. Selling the bond would generate $_______ . Converting the bond and selling the common stock would generate $_______ . Thus, it would be better to SELL THE BOND / CONVERT THE BOND INTO COMMON STOCK AND THEN SELL THE STOCK
A firm has equity with market value $100 million and debt with market value at $70 million. The debt pays perpetual expected coupons of $3.5 million annually. The above numbers are prior to a stock buyback being announced. The firm uses some of its cash buyback stock on of $20 million. As a result of the fall in its cash, the expected coupon payment to debt reduce to $3.4 million (expected payments is the probability weighted future coupons, and the probability that in some future states of the world the firm would default has increased due to the the stock buyback). Also the rate of discount Rd for expected coupons paid to debt rises to 5.35%. Assume Modigliani-Miller is true (which also means there are no taxes). What will be the value of Equity after the stock buyback? (Do not include the $20 million that is paid to the Equity holders.)
5. You bought a convertible bond issued by Spark Corp which has a conversion ratio of 25 common shares for each $1,000 bond. a. At what stock price per share would you make a profit (“in the money") if you bought the bond at par? b. What would you expect the bond to sell for in the market if the stock trades at $48 per share?
*assume all bonds make semiannual coupon payments*
Please provide assistance with the attached questions regarding Finance.
Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity financing for his company. The stock has a beta of 1.02. Paul estimated that the market return is 6.48%. The current rate for 10-year Treasury Bonds is 2.95%. Calculate cost of common equity financing using CAPM -- SML formula
FIXY has assets of $2 million invested in a 25-year, 6 percent annual coupon Treasury bond selling at par. The assets are financed with equity and a $ 1700000, 4-year, 3 percent annual coupon capital note selling at par. What is the leverage adjusted duration gap of FIXY? What is the impact on equity value if the relative change in all market interest rates is AR/(1+R /2)=0.003?
Imagine TOP HAT Prefabs issued common shares at a market price of GBP 88 and paid dividends of GBP 6 in 2020. If dividends in 2021 are expected to grow by 5%, the market by 8%, and flotation costs are 20% of market price, what would the company’s cost of equity be? Current market price is GBP 99 and the gilt bond (UK government) gives a 1% rate. If TOPHAT Prefabs was planning to provide a constant growth rate of dividends, what would this growth rate be considering that the UK Gilt rate is 1,5%, the expected rate of return of the market is 3% and the CAPM is 12%? The company needs to purchase raw materials and decides to contract 2 loans for a period of 5 years, as follows: a GBP 80,000 with a 3% semi-annual interest rate and a GBP 150,000 with a 2% quarterly interest rate. What is the effective interest rate for TOPHAT Prefabs? The company decides to renew its manufacturing equipment and sell 2 assembling machines at a price of GBP 15,000 and GBP 25,000 respectively. The…
Suppose that a firm has 5 bondholders each expecting to be paid today their principal of $1 million each. The firm is in default, as its going-concern value is only $3 million, falling short of the $5 million to be repaid. The firm could liquidate and sell all of its assets for a value of $1 million, so that each bondholder would recover $200,000 on their claim. The firm offers its bondholders a debt-for-equity swap, but four of out the five bondholders must participate and become equityholders for the swap to succeed. In the table below, calculate the "lower bound" payoff if only four bondholders participate and the "upper bound" payoff if all five bondholders participate. The correct answer is lower bound=$500,000 and upper bound=$600,000
D4) Consider a firm with zero-coupon bonds that mature in 1 year and combined face value of $100,000. The market value of the firm's assets is $95,000 and the standard deviation of returns of the assets is 15%. The risk-free rate is continuously compounded 6%. What is the value of the equity? Answer: $6,076 How to get this answer please!

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