Corporate Finance: A Focused Approach (7th Edition)

Chapter 5

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A bond is a fixed income instrument which ... more

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The main four types of bonds are: 1. Treasury ... more

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The U.S. Treasury bonds have some risk because of ... more

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The kinds of risks that foreign bond investors can... more

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The floating-rate bonds pay a variable coupon rate... more

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The benefit of a call provision to the bond issuer... more

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The bonds that do not have a sinking fund feature ... more

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Income bonds are the bonds that pay interest to ... more

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Convertible bonds allow investors to convert their... more

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As the inflation rate increases, the required rate... more

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When the prevailing interest rate is higher than ... more

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$955.14 ; Identify the inputs for the semi-annual ... more

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$1,301.77 ; Calculate the coupon payment by ... more

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New issue refers to the securities that are ... more

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The yield to maturity is the rate of interest that... more

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$1,257.30 ; Calculate the semi-annual coupon ... more

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The current yield defines the earnings earned from... more

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Yes, if the capital gains are negative, then the ... more

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Yield to maturity = 10.90%Current yield = 9.41% ; ... more

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YTM: 8.38%YTC: 6.85%The bond is likely to be ... more

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The nominal interest rate can be calculated using ... more

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The fair estimate of the short-term nominal risk-... more

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The fair estimate of the long-term nominal risk-... more

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The fair estimate of the real risk-free rate can ... more

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The inflation premium can be estimated by taking a... more

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2.00% ; A bond is a long-term debt instrument. ... more

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The rise in interest rates leads to a decline in ... more

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The long-term bondholders are exposed to more ... more

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7.50% ; A bond is a long-term debt instrument. ... more

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The major rating agencies are Company S, Company M... more

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The difference between the yield on a corporate ... more

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The decline in bond ratings leads to an increase ... more

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1.50% ; A bond is a secured long-term debt ... more

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The bond issued by the small companies has a high ... more

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A yield curve is a line which represents interest ... more

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A normal yield curve is a curve in which long-term... more

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It is a normal yield curve if the interest rates ... more

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The bonds with very low ratings that have a high ... more

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Liquidation refers to bringing the business to an ... more

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The priority of claims is as followed:Property tax... more

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A bond is a secured long-term debt security and ... more

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The bond price and interest rates have an inverse ... more

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Since the issuer is likely to call back the bonds ... more

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The following are the two ways for setting up a ... more

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$928.39 ; Calculate the coupon payment by ... more

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12.48% ; Calculate the coupon payment by ... more

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8.55% ; Calculate the coupon payment by ... more

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Yield on 2-year treasury securities = 7.00%Yield ... more

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2.50% ; A bond is a long-term debt instrument. ... more

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0.30% ; A bond is a long-term debt instrument. ... more

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$1,085.80 ; Calculate the semi-annual coupon ... more

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Annual yield to maturity: 6.62%Annual yield to ... more

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14.82% ; Calculate the future value by multiplying... more

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8.65% ; Calculate the coupon payment by ... more

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10.7845% ; Calculate the number of periods by ... more

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6.48% ; Calculate the semi-annual coupon payment ... more

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 BondPrice @ 8%Price @ 7%% change10-year, 10% ... more

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 Time01234Price of bond C1$1,012.790$1,010.018$1,... more

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5.8000% ; Calculate the inflation premium by ... more

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1.50% ; Calculate the average inflation premium of... more

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6.00% ; Calculate the yield of a 1-year treasury ... more

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The key features of bond are:Coupon interest ... more

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A call provision gives the company a right to buy ... more

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The present value of all the expected future cash ... more

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The value of a bond is determined by taking the ... more

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The number of years is multiplied by 2 and the ... more

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The nominal interest rate can be calculated by ... more

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The rate of return provided on securities with ... more

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The inflation premium can be estimated by taking a... more

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The difference between the yield on a corporate ... more

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The rise in interest rates leads to a decline in ... more

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The reinvestment rate risk is a possibility of a ... more

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The market risk premium is more sensitive to ... more

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The relationship between the maturity of ... more

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When a company is unable to pay its expenses and ... more

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7.06% ; Calculate the semi-annual coupon payment ... more

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