Question

In: Finance

-Find an example of a company that has issued a bond -Why did the company issue...

-Find an example of a company that has issued a bond

-Why did the company issue the bond?

-What is the price of the bond today?

-Why do believe the bond value has changed?

Expert Solution

-Find an example of a company that has issued a bond

Company name = Reliance Industries Limited

Face value or At Par value = INR 1000

Number of bonds = 25000

Coupon = 6.95% or INR 69.5

Market price = INR 991

Maturity = 3 years

Yield = 7.3%

Rating of Bond = AAA

---------------------------------------

-Why did the company issue the bond?

Company issued bond to finance its projects. 3 years issuance will give stability and ensure liquidity.

--------------------------------

-What is the price of the bond today?

Price of per bond is INR 991

Can be calculated: =PV(7.3%,3,-69.5,-1000)

--------------------------------

-Why do believe the bond value has changed?

Bond value changed due to change in the yield of the bond. The present interest rate increased from 6.95% to 7.3% resulting higher discounting factor.

Hence, bond price decreased from INR 1000 to INR 991.

The bond price decreases as yield on bond increases. The discounting factor increases in form of yield.

jeff jeffy answered 2 years ago

Find an example of an actual product failure. (a) Explain why did it occur? EV [10...

Find an example of an actual product failure. (a) Explain why did it occur? EV [10 Marks] (b) What was the root cause of the failure? AN [5Marks] (c) What were the consequences? AP [5 Marks]

Assume ALFA Company has a bond issue with a ytm of 5% The company has 3,200,000...

Assume ALFA Company has a bond issue with a ytm of 5% The company has 3,200,000 shares of common stock outstanding with a dividend growth rate of 1.2%. They will issue a 75 cent dividend next week and their beta is 1.2. The T-Bill rate is 2% They have 10,000,000.00 in preferred stock (which is 15% of their equity) with a 7.55% dividend. The company’s tax rate is 35%. The capital structure is 60% equity and 40% debt. The market...

Describe a bond issued at par. Explain why an investor would purchase a bond issued at...

Describe a bond issued at par. Explain why an investor would purchase a bond issued at par instead of a bond issued at a discount or a bond issued at a premium (In Detail)

Describe a bond issued at a discount. Explain why an investor would purchase a bond issued...

Describe a bond issued at a discount. Explain why an investor would purchase a bond issued at a discount instead of a bond issued at par or a bond issued at a premium. (Review pages 515 to 520)

Find a company that is an example of differentiation or focus differentiation. Explain why this company is...

Find a company that is an example of differentiation or focus differentiation. Explain why this company is an example. Does this company or the conditions meet the criteria for being appropriate for differentiation or focus differentiation? Explain why or why not. Has this company experienced any of the risks or drawbacks of using either differentiation or focus differentiations? Explain. What has been the impact of this strategy on power? Explain this using the Five Forces Model. Explain the advantages and disadvantages that this company has experienced as...

Find a company that is an example of differentiation or focus differentiation. Explain why this company...

Find a company that is an example of differentiation or focus differentiation. Explain why this company is an example. Does this company or the conditions meet the criteria for being appropriate for differentiation or focus differentiation? Explain why or why not. Has this company experienced any of the risks or drawbacks of using either differentiation or focus differentiations? Explain. What has been the impact of this strategy on power? Explain this using the Five Forces Model. Explain the advantages and...

Describe a serial bond issue. Why are serial bond issues preferred by the issuer? Why are...

Describe a serial bond issue. Why are serial bond issues preferred by the issuer? Why are serial bond issues preferred by the bond holders?

Considering 30-year maturity bond (Original-issue discount bond) that is issued with a coupon rate of 4%...

Considering 30-year maturity bond (Original-issue discount bond) that is issued with a coupon rate of 4% and aYTM of 9%. Assuming that the bond pays coupons once annually. Case 1: If you do not sell the bond at year end. If your tax rate on interest income is 38% and the combined tax rate on capital gain is 20% at year end. How much will you will owe taxes on this investment? What is your after-tax holding period return? Case...

A company has a zero coupon bond issue with a face value of $1 million that...

A company has a zero coupon bond issue with a face value of $1 million that matures in one year. The assets of the firm are currently valued at $1.2 million, but this amount is expected to either decrease to $1.1 million or increase to $1.5 million in a year's time. Assume the risk-free rate is 5%. What is the value of the equity? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas...

CSM Corporation has a bond issue outstanding at the end of the year. The bond has...

CSM Corporation has a bond issue outstanding at the end of the year. The bond has 15 years remaining to maturity and carries a coupon interest rate of 6%. Interest on the bond is compounded on a semiannual basis. The par value of the CSM bond is $1,000 and it is currently selling for $874.42. a. Solve for the yield to maturity. Show your work. b. Solve for the price of the bond if the yield to maturity is 2%...