You are managing a portfolio of $1.0 million. Your target
duration is 21 years, and you can choose from two bonds: a
zero-coupon bond with maturity five years, and a perpetuity, each
currently yielding 2%.
a. How much of (i) the zero-coupon bond
and (ii) the perpetuity will you hold in your portfolio?
(Do not round intermediate calculations.
Round your answers to 2 decimal places.)
b. How will these fractions change next
year if target duration is now twenty years?
In: Finance
ROE and Leverage
Suppose the company in Problem 1 has a market-to-book ratio of
1.0.
a. Calculate return on equity, ROE, under each of the three
economic scenarios before any
debt is issued. Also calculate the percentage changes in ROE for
economic expansion and recession, assuming no taxes.
b. Repeat part (a) assuming the firm goes through with the proposed
recapitalization.
c. Repeat parts (a) and (b) of this problem assuming the firm has a
tax rate of 21 percent.
Please show all the steps and don't round off calculations.
Problem 1 :
Sunrise, Inc., has no debt outstanding and a total market value of
245000. Earnings before interest and taxes, EBIT, are projected to
be $19,000 if economic conditions are normal. If there is strong
expansion in the economy, then EBIT will be 25 percent higher. If
there is a recession, then EBIT will be 40 percent lower. The
company is considering a $58800 debt issue with an interest rate of
8 percent. The proceeds will be used to repurchase shares of stock.
There are currently 5,000 shares outstanding. Ignore taxes for this
problem. Assume the stock price is constant under all
scenarios.
In: Finance
Cart A traveling on a frictionless track at 6.0 m/s collides head-on with a 1.0 kg cart B traveling in the opposite direction at 4.8 m/s. After the collision, cart A does not move. If the collision is perfectly elastic, a) What is the final velocity of cart B? b) what is the inertia of cart A? c) what is the kinetic energy of cart B after the collision?
In: Physics
The density of water at room temperature is less than the assumed 1.0 g/mL used in the calculations for determining the enthalpy of neutralization. How will this small (but real) assumption affect the reported enthalpy of neutralization for the strong acid-weak base reaction? Explain.
In: Chemistry
Estimate the percentage of specular component of total solar radiation onto flat surfaces. Consider the following flat surfaces: (a) surface roughness of 0.1 µm; (b) surface roughness of 1.0 µm; and (c) surface roughness of 10 µm
In: Mechanical Engineering
If a solution contains 7.5 X 10-8M Cu+2 and 1.0 X 10-7 M Zn+2 will either metal precipitate as a hydroxide salt if the pH is 8.5? At what concentration of OH- will each metal precipitate?
In: Chemistry
Three positive point charges of q1 = 3.3 nC,
q2 = 6.2 nC, and q3 = 1.0 nC, respectively,
are arranged in a triangular pattern, as shown below. Find the
magnitude and direction of the electric force acting on the 6.2 nC
charge.
In: Physics
Consider the titration of 50.0 mL of 0.5 M weak acid analyte HF (Ka = 6.6 x 10-4) with 1.0 M titrant NaOH. A. (5 pts) What is the volume of base added at the stoichiometric (equivalence) point?
In: Chemistry
Determine the real root of f (x) = −25 + 82x − 90x2 + 44x3
−8x4 + 0.7x5:
Using python in bisection to determine the root to
s = 10%. Employ
initial guesses of xl = 0.5 and xu = 1.0;
pls use python
In: Statistics and Probability
Which of the following is not a characteristic for a normal distribution?
a. It is a symmetrical distribution
b. The mean is always zero
c. The mean, median, and mode are all equal
d. It is a bell-shaped distribution
e. The area under the curve always equals 1.0
In: Math