Question
In: Finance
4. Assume your firm has 20 shares of equity, a 10-year zero-coupon debt with a maturity...
4. Assume your firm has 20 shares of equity, a 10-year zero-coupon debt with a maturity value of $200 and warrants for 8 shares with a strike price of $25. Calculate the value of the debt, the share price, and the price of the warrant. Given the above, understand I have to use BSCall (A, B, sigma, r, T). How do I calculate A, B and sigma based on the given above?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
(a) Suppose you purchase a 20-year, zero-coupon bond with a yield to maturity of 10%. For...
(a) Suppose you purchase a 20-year, zero-coupon bond with a
yield to maturity of 10%. For a face value of $800, the bond will
initially trade for
(b) If the bond’s yield to maturity change to be 12%, what will
its price be five years later?
(c) If you purchased the bond at $118.91 and sold it 5 years
later, what would the rate of return of your investment be?
Suppose a 10-year zero-coupon bond (zero) is trading spot at 6% and a 20-year zero is...
Suppose a 10-year zero-coupon bond (zero) is trading spot at 6%
and a 20-year zero is trading spot at 8%. We know that the 10 year
forward rate for a 10 year zero must be 0.1004 (annual
compounding). All are risk free. If the rates are not 0.1004 for
the forward you can make a free profit by using arbitrage.
Suppose you have $0 dollars today but are allowed to sell and
buy $100,000 worth of zero coupon bonds (and...
Suppose a 10-year zero-coupon bond (zero) is trading spot at 5% and a 20-year zero is...
Suppose a 10-year zero-coupon bond (zero) is trading
spot at 5% and a 20-year zero is trading spot at 7%. In lectures
(L4.9) we proved that the 10 year forward rate for a 10 year zero
must be 0.0904 (annual compounding). All are risk free.
If the rates are not 0.0904 for the forward you can make a free
profit by using arbitrage. Suppose you have $0 dollars today but
are allowed to sell and buy $100,000 worth of zero...
A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 9.5%...
A newly issued 20-year maturity, zero-coupon bond is issued with
a yield to maturity of 9.5% and face value $1,000. Find the imputed
interest income in: (a) the first year; (b) the second year; and
(c) the last year of the bond’s life. (Round your answers
to 2 decimal places.)
A zero-coupon bond with $1000 face value has 10-year to maturity. If this bond is currently...
A zero-coupon bond with $1000 face value has 10-year to
maturity. If this bond is currently trading at $463.20. What is
this bond’s YTM (i.e., required rate of return)?
What is the coupon rate for a bond with three
years until maturity, a price of $953.46, and a yield to maturity
of 6%? Assume the bond’s face value is $1,000.
Kodak has a bond with 10 year until maturity, a coupon rate of
10%, and selling for $1,200. This bond...
Assume that the 1-year zero-coupon bond is sold at $89.78 and the yields to maturity for...
Assume that the 1-year zero-coupon bond is sold at $89.78 and
the yields to maturity for the coupon bonds selling at market
prices equal to their face values are 11% and 13% for 1-year and
1.5-year issues respectively. Coupons are paid every 6 months and
face values are $100 for all the bonds.
(a) Calculate the spot rate curve (s0.5,
s1, s1.5).
(Keep your answer in decimal format 4 decimal places, e.g.
0.1234. Do not give in percent format e.g....
Assume that the 1-year zero-coupon bond is sold at $88.97 and the yields to maturity for...
Assume that the 1-year zero-coupon bond is sold at $88.97 and
the yields to maturity for the coupon bonds selling at market
prices equal to their face values are 12% and 14% for 1-year and
1.5-year issues respectively. Coupons are paid every 6 months and
face values are $100 for all the bonds.
(a) Calculate the spot rate curve (s0.5,
s1, s1.5).
(Keep your answer in decimal format 4 decimal places, e.g.
0.1234. Do not give in percent format e.g....
Assume that the 1-year zero-coupon bond is sold at $89.78 and the yields to maturity for...
Assume that the 1-year zero-coupon bond is sold at $89.78 and
the yields to maturity for the coupon bonds selling at market
prices equal to their face values are 11% and 13% for 1-year and
1.5-year issues respectively. Coupons are paid every 6 months and
face values are $100 for all the bonds.
(a) Calculate the spot rate curve (s0.5,
s1, s1.5).
(Keep your answer in decimal format 4 decimal places, e.g.
0.1234. Do not give in percent format e.g....
A 10-year zero coupon bonds was issued with a yield to maturity of 5% You are...
A 10-year zero coupon bonds was issued with a yield to maturity
of 5% You are an investor with a one-year holding period with an
ordinary income tax of 40% and capital gain tax of 20%. Assume in
one year the interest rate remains the same. Determine:
The current price of the bond
The price of the bond at the end of the year
The after tax holding period return
You have just purchased a 10-year zero-coupon bond with a yield to maturity of 10% and...
You have just purchased a 10-year zero-coupon bond with a yield
to maturity of 10% and a par value of $1,000. What would the rate
of return on your investment at the end of the year be if you sold
the bond? Assume the yield to maturity on the bond is 11% at the
time you sell.
A) 10.00%
B) 20.42%
C) 13.85%
D) 1.4%
2. Consider a 5-year bond with a 7% coupon and a yield to
maturity of...
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