of the following events would make it more likely that a company would choose to call its outstanding callable bonds? a. The company’s bonds are downgraded. b. Market interest rates rise sharply. c. Market interest rates decline sharply. d. The company ’s financial situation deteriorates significantly. e. Inflation increases significantly. . A 10-year bond with a 9% annual coupon has a yield to maturity of 8%. Which of the following statements is CORRECT?
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activities of the corporation are entrusted to them. Guaranteed Stocks-Stock of corporation wherein the payment of dividends is guaranteed by another corporation. Debenture Stock- not stock in the real sense‚ but a debt issue similar to debenture bonds. They are fixed interest securities issued by limited
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stocks and bonds which can be a sign of the company’s financial standing in a market. Since investors are risk averse and they would not like to put their money on stocks and bonds of a struggling company‚ but they would like to put their money on stocks and bonds of a stable and a progressing company. Investors benefit from company’s profit in the form of dividend when they buy a company’s stocks and investors can get higher or lower yield based on the bonds. This is the rationale behind bonds’ and stocks’
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In the financial markets‚ the most common forms of marketable securities are stocks and bonds. Though they have some similarities to each other‚ they differ greatly in many aspects. Broadly speaking‚ both financial instruments enable one to invest in corporations‚ public and/or private‚ with possible profitable returns in the future. Stocks (or shares)‚ by definition‚ are shares of ownership in a company. By purchasing stocks in a company‚ the investor becomes a part owner‚ and thereby owns a percentage
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A record of all transactions made between one particular country and all other countries during a specified period of time. BOP compares the dollar difference of the amount of exports and imports‚ including all financial exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in Read more: http://www.investopedia.com/terms/b/bop.asp#ixzz2KhMuRIuZ Balance of payments (BoP) accounts are an accounting record of all monetary transactions
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Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments‚ have a YTM of 9 percent‚ and have five years to maturity. The current yield for Bonds P and D is percent and percent‚ respectively. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g.‚ 32.16)) | If interest rates remain unchanged‚ the expected capital gains yield over the next year for Bonds P and D is percent
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5 Bond Yields for Johnson & Johnson Objective: The case enables the student to gain insight into the financing activities of large corporations and to practice calculating bond prices and yields. Computations are carried out for annual and semiannual interest periods‚ and for fractional periods. Case Discussion: Johnson & Johnson is one of the leading pharmaceutical firms in the world. It is large and financially sophisticated. When it needs to borrow money‚ it sells bonds where
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borrowing money by issuing bonds is that interest payments‚ unlike dividends‚ are tax-deductible. But interest has to be paid even in a year in which a company makes no profit‚ so it is safer to have equity capital as well‚ on which no dividends need be paid if there are no profits. 4/29/2014 3 4 • What are differences between bonds and shares? Stocks and Bonds Which security is better? 4/29/2014 4/29/2014 5 1 4/29/2014 STRUCTURE BONDS - a form of debt with
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Value of Money to Security Valuation – Valuation of Bonds and Debt Securities A bond or a debenture is a long term debt instrument carrying a fixed rate of interest which is known to investors. A bond is redeemable after a specified period. Bonds are also called gilt edged securities or gilt when issued by the government since it is free of default risk. Features of a Bond or Debenture • Face Value – Face value is called par value. A bond / debenture is generally issued at a par value and
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VALUATION AND MANAGEMENT OF BONDS All Rights Reserved © Oxford University Press‚ 2011 2 CONTENTS Introduction Features of the bond Face Value l Coupon Rate Periodicity of coupon payments Maturity Redemption Value Fixed and Floating Rate Bonds Indexed Bonds Callable & Puttable Bonds C ll bl & P tt bl B d Zero Coupon and Deep Discount Bonds Convertible Bonds CHAPTER 6 Types of Bonds Types of Bonds Cash Flow of the bond VALUATION & MANAGEMENT OF BONDS 3
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