Essentials of Corporate Finance (10th Edition)

Chapter 6

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The following cash flows related to the bond are ... more

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Bond value is the summation of the present value ... more

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No, the default risk is not the only risk ... more

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The following characteristics of debt are as ... more

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Indenture is the legal document containing an ... more

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A sinking fund is a fund in which money is set ... more

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A junk bond are low rated bonds with high default ... more

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Change in the value of a bond due to the change in... more

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Bonds with the callable provision offer higher ... more

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A bond issuer under the put option is obliged to ... more

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The issue date for the bond is 04/18/2017, bond ... more

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The company might have used different corporate ... more

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Bonds are mostly traded over the counter and there... more

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Bid price is the price at which the buyer is ... more

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A clean price is that quoted price which does not ... more

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Real return is the annual profit earned on an ... more

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The fisher effect states that the real interest ... more

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The term structure of interest rates depicts the ... more

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The treasury yield curve shows a relationship ... more

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Components that make up bond yield are:The real ... more

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10% ; The coupon rate is the annual rate of ... more

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Call provision ; A bond is an instrument that ... more

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 Yes, bond ratings are only concerned with the ... more

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The following features of municipal bond are as ... more

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Dirty price refers to the cost of a bond that ... more

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Real return is the annual profit earned on the ... more

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Historical data suggests that sometimes the short-... more

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Value of Bond: $849.53Effective annual yield: 12.... more

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Yield to maturity: 10.00%Effective annual yield: ... more

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No, there is an interest rate risk in treasury ... more

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30-year treasury bond. ; Treasury bonds are long-... more

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No, the bid price cannot be higher as compared to ... more

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The bid yield is higher than the bid price, as ... more

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Benefits of call provision are as follows:The ... more

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Coupon rates may be decided by the company by ... more

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Yes, in the following circumstances, the investors... more

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Yes, bond ratings are important as they tell about... more

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Lower ratings are given to these bonds due to a ... more

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Split ratings occur because of different views of ... more

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Interest on municipal bonds is exempted from ... more

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The bid-ask spread is used to measure the ... more

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There is a controversy over unsolicited ratings, ... more

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A 100-year bond outlives an individual investor, ... more

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For a non-callable bond, the yield to maturity (... more

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The value of the bond decreases if the interest ... more

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$891.74 ; Calculate the annual coupon payment by ... more

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6.42% ; Calculate the annual coupon payment by ... more

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6.50% ; Identify the inputs, number of periods (N... more

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$951.02 ; Calculate the number of periods by ... more

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4.78% ; Calculate the number of periods by ... more

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5% ; Calculate the number of periods by ... more

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Approximate real rate of return: 2.80%Exact real ... more

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5.57% ; Inflation is a kind of economic ... more

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2.75% ; Inflation is a kind of economic ... more

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8.41% ; Inflation is a kind of economic ... more

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Coupon rate: 5.25%Bid price: $1,209.4530Previous ... more

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The bond maturing in 2037 is a premium bond.... more

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$5,466.58 ; Calculate the number of periods by ... more

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$1,790.31 ; Calculate the number of periods by ... more

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$4,700.15 ; Calculate the number of periods by ... more

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It can be observed in the graph that the price of ... more

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The percentage change in the price of Bond B:When ... more

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The percentage change in the price of Bond J1:When... more

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Current yield: 5.88%Yield to maturity: 5.94%... more

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4.62% ; Calculate the number of periods by ... more

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$1,039.08 ; Calculate the semi-annual coupon ... more

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$1,010.33 ; Calculate the semi-annual coupon ... more

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Yield to maturity(YTM): 8.74%Current yield of the ... more

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The maturity of the bond can be any number of ... more

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5.3346% ; Calculate the number of years for the ... more

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Ask price of the bond: $1,278.9890Bid price of the... more

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2.8633% ; Calculate the price of the bond by ... more

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6.3092% ; Calculate the price of the bond by ... more

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Price of the bond:  $2,124.7366Current Yield of ... more

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6.1214% ; Calculate the price of the bond by ... more

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Current yield of Bond P1: 7.82%Capital gains yield... more

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The shortest maturity of the bonds outstanding of ... more

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In the given case, the treasury bond yield curve ... more

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There exists a difference between the monthly ... more

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The schedule shows the yield to maturity of the ... more

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A bond that has collateral associated with it will... more

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The senior the bond is, the lower the rate of ... more

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If the bonds contain a sinking fund, then the ... more

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If a bond contains a call provision having ... more

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A bond with a deferred call provision will have a ... more

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A bond with a make-whole call provision will have ... more

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The coupon rate will be low due to the presence of... more

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The coupon rate is low due to the presence of a ... more

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A conversion feature can lower the coupon rate. ... more

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The value of a floating-rate coupon and coupon ... more

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