Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 30, Problem 13P
a)
Summary Introduction
To determine: The value of assets and liabilities of C fund.
Introduction:
The duration of the securities are equal to the weighted average maturity of the cash flow.
Summary Introduction
To determine: The value of equity.
b)
Summary Introduction
To determine: The duration of C fund’s equity.
Introduction:
The duration of the securities are equal to the weighted average maturity of the cash flow.
c)
Summary Introduction
To determine: Number of dollars Person X requires to liquidate and reinvest which helps to minimize the interest rate sensitivity of funds.
d)
Summary Introduction
To determine: The notational amount of the swap.
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The general fund has the following transactions for 2022:
Issued $1,000,000 face value bonds with a coupon rate of 3%.
Made a $100,000 principal payment on the bonds.
Made a $25,000 interest payment on the bonds.
Accrued interest due in 2023 on the bonds is $5,000.
What is the effect of the above transactions on the general fund's fund balance in 2022?
Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 2.5 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses are 0.55 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 7 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual funds over the two-year investment period.
Select one:
a. 3.77%
b. 5.09%
c. 7.54%
d. 8.86%
e. 10.18%
City Slicker Corporation pays $55,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $1,475. When the bonds mature, there is a sinking fund balance of $612,000, and $600,000 is needed to redeem the bonds.
Required:Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's earnings.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.
Chapter 30 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 30.1 - How can insurance add value to a firm?Ch. 30.1 - Prob. 2CCCh. 30.2 - Prob. 1CCCh. 30.2 - What are the potential risks associated with...Ch. 30.3 - How can firms hedge exchange rate risk?Ch. 30.3 - Prob. 2CCCh. 30.4 - How do we calculate the duration of a portfolio?Ch. 30.4 - How do firms manage interest rate risk?Ch. 30 - The William Companies (WMB) owns and operates...Ch. 30 - Genentechs main facility is located in South San...
Ch. 30 - Prob. 3PCh. 30 - Your firm faces a 9% chance of a potential loss of...Ch. 30 - BHP Billiton is the worlds largest mining firm....Ch. 30 - Prob. 6PCh. 30 - Prob. 7PCh. 30 - Prob. 9PCh. 30 - Prob. 10PCh. 30 - Prob. 11PCh. 30 - You have been hired as a risk manager for Acorn...Ch. 30 - Prob. 13PCh. 30 - Prob. 14P
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