A firm wishes to raise $10 million now. They will issue 6% pa semi-annual coupon bonds that will mature in 8 years and have a face value of $1,000 each. Bond yields are 10% pa, given as an APR compounding every 6 months, and the yield curve is flat.
How many bonds should the firm issue? All numbers are rounded up.
When someone says that they're "buying American dollars" (USD), what type of asset are they probably buying? They're probably buying:
Question 405 DDM, income and capital returns, no explanation
The perpetuity with growth formula is:
###P_0= \dfrac{C_1}{r-g}###
Which of the following is NOT equal to the total required return (r)?
A mature firm has constant expected future earnings and dividends. Both amounts are equal. So earnings and dividends are expected to be equal and unchanging.
Which of the following statements is NOT correct?
A young lady is trying to decide if she should attend university or begin working straight away in her home town.
The young lady's grandma says that she should not go to university because she is less likely to marry the local village boy whom she likes because she will spend less time with him if she attends university.
What's the correct way to classify this item from a capital budgeting perspective when trying to decide whether to attend university?
The cost of not marrying the local village boy should be classified as:
Which of the below formulas gives the profit ##(\pi)## from being long a call option? Let the underlying asset price at maturity be ##S_T##, the exercise price be ##X_T## and the option price be ##f_{LC,0}##. Note that ##S_T##, ##X_T## and ##f_{LC,0}## are all positive numbers.
A 4.5% fixed coupon Australian Government bond was issued at par in mid-April 2009. Coupons are paid semi-annually in arrears in mid-April and mid-October each year. The face value is $1,000. The bond will mature in mid-April 2020, so the bond had an original tenor of 11 years.
Today is mid-September 2015 and similar bonds now yield 1.9% pa.
What is the bond's new price? Note: there are 10 semi-annual coupon payments remaining from now (mid-September 2015) until maturity (mid-April 2020); both yields are given as APR's compounding semi-annually; assume that the yield curve was flat before the change in yields, and remained flat afterwards as well.
Question 803 capital raising, rights issue, initial public offering, on market repurchase, no explanation
Which one of the following capital raisings or payouts involve the sale of shares to existing shareholders only?