Business Finance Help for College and University Students

Bond yield and issuance

JRJ Corporation recently issued 10-year bonds at their par value, $1,000. These bonds pay $60 in interest each 6 months; their price has remained stable since they were issued, they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of ...continues

Multiple choice question on bonds

Which one of the following statements is most correct? a. All else equal, a bond that has a coupon rate of 10% will sell at a discount if the required rate of return for a bond of similar risk is 8%. b. Debentures generally have a higher yield to maturity relative to mortgage bonds. c. If there are two bonds with equal ...continues

Practice Problem

Walk me through the steps to do this on a TI BA II Plus and the rationale. Pablo's Pizza International Inc.'s common stock currently sells for $20 per share. The stock has just paid an annual dividend of $1.00 (D0 = $1.00). The dividend is expected to grow at a constant rate of 10% per year. (Pr. 10-3) a. Calcula ...continues

Practice Problem

Walk me through the steps to do this on a TI BA II Plus and the rationale. EMC has preferred stock outstanding which pays a dividend of $5.00 at the end of each year. This stock was issued in perpetuity and has no maturity date. EMC's preferred stock sells for $60 per share. (Pr. 10-4) Calculate this preferred stock ...continues

Practice Problem

Walk me through the steps to do this on a TI BA II Plus and the rationale. Your broker offers to sell you some shares of Swift and Co. common stock that has just paid an annual dividend of $2.00 (yesterday). You expect the dividend to grow at the rate of 5% per year for the next 3 years, and, if you buy the stock, you ...continues

Practice Problem

Walk me through the steps to do this on a TI BA II Plus and the rationale. Von Burns Technologies Ltd. (VBTL) has been growing at a rate of 20% per year in recent years. This same growth rate is expected to last for another 2 years. (Pr. 10-19) a. If D0 = $1.60, k = 10%, gn = 6%, what is VBTL stock worth today? ...continues

Practice Problem

Walk me through the steps to do this on a TI BA II Plus and the rationale. Omega / Alpha Ltd. sold a Preferred stock issue 3 years ago. This Preferred stock has a maturity 20 years from its issue date and pays a $3.00 annual dividend which provides a 12% to its original investors. Since this Preferred stock was sold inte ...continues

Intro to Finance

1. Consider the shape of the current Treasury Yield Curve. a. What does the shape of the current curve tell us about the market's expectation of future interest rates? Explain using the liquidity premium theory and the expectation theory. b. What factors might explain the market's expectations about the future interest rates? ...continues

Flanigan Corporation has just paid an annual dividend of $1.50 per share (D0 = $1.50).

Walk me through the steps to do this on a TI BA II Plus and the rationale. Flanigan Corporation has just paid an annual dividend of $1.50 per share (D0 = $1.50). The dividend is expected to grow 5% per year for the next 3 years, and then 10% a year thereafter. Calculate FC's expected dividend per share for each of the ne ...continues

Between Planes -- Appreciate Quick Response

Show steps on TI BA Plus calculator Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently experienced a market revaluation. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8%, with interest paid semiannually. The required nominal rate on this debt ...continues