SECTION BI Question 2 Your analysis of Exxa Capital Berhad's indicated that the beta is 1.6. The risk-free rate instrument return is 3.85% and the current market return is 8.15%. The following is the capital structure of Exxa Capital Berhad: 4 Capital Bonds Details RM900 per unit and total outstanding bond issue is 3,000 units Total valuation is RM2.5 million Total value of outstanding common stock is RM12 million Preferred stocks Common stocks Table 1: Exxa Capital's Capital Structure The company's tax rate is 24%. Cost of Capital 6.89% 9.5% 6.14%
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- Question two Using the following data, estimate the new bond prices of each of the 3 bonds if their yields (interest rates) increase by 0.3%. You should take into account both duration and convexity. Company Maturit Coupo Payment Duratio Yield y Date frequency BP Rio Tinto 2033 Severn Trent 2021 ΔΡ P 2058 n 3.561% Semi- annual 6.125% semi-annual 12.89 n 1.457% semi-annual 24.053 -×100 = (– D™ × Ay×100) + m 8.217 2 The percentage change in the bond price is estimated: 3.11% 78.935 Convexity 4.635% 229.86 4.773% 878.73 ×Convexity× (Ay)² × 100 Bond Price (TZS) 104.52 120.36 37.92Analysis and Application of Knowledge Rossiana Marie, Inc. lists a bond as Ross 9s34, and shows the price as selling for 88.875% of its face value. If your required return rate is 10%. would you buy one of these bonds in 2021? * 5 points Your answer Upload Solution: Rossiana Marie, Inc. lists a bond as Ross 9534, and shows 15 points the price as selling for 88.875% of its face value. If your required return rate is 10%, would you buy one of these bonds in 2021? 1 Add file Intal Corporation bonds have a coupon of 14%. pay interest semiannually. Spoints and mature in 7 years. Your required rate of return for such an investment is 10% annually. How much should you pay for a PHP1.000 Intal Corporation bond? Your answer Upload Solution: Intal Corporation bonds have a coupon of 14%. pay 10 points interest semiannually, and mature in 7 years. Your required rate of return for such an investment is 10% annually. How much should you pay for a PHP1.000 Intal Corporation bond?* 1 Add fileWhat is the Holding period return____% Purchase price of the bond (pv) $910 Sale price of the bond after 2 years (fv) $966.98 Number of coupon payments received (nper) 2 Coupon payment (pmt) $82.00
- Q.8 Maharshi is attempting to find the nominal rate of interest for each of two securities A and B issued by different firms at the same point in time. He has gathered the following data: Characteristics Secuity A 3 Years Security B 15 Years Time to Maturity Inflation expectation premium 9% 7% Risk Premium For: Liquidity Risk Default Risk 1% 1% 1% 2% Maturity Risk Other Risk 0.50% 1.50% 0.50% 1.50% a. If the real rate of interest is 2%, find the risk free rate of interest applicable to each security. b. Find the total risk premium attributable to each securitys. c. Calculate the nominal rate of interest for each security?F What must be the price of a $2,000 bond with a 5.9% coupon rate, annual coupons, and 25 years to maturity if YTM is 10.2% APR? A. $984.98 B. $1,231.23 OC. $1,723.72 D. $1,477 47 CODEData table ↑ The current zero-coupon yield curve for risk-free bonds is as follows: What is the price per $100face value of a two-year, zero-coupon, risk-free bond? The price per $100 face value of the two-year, zero-coupon, risk-free bond is $ (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) YTM 1 4.98% 2 5.48% 3 5.78% Print Done 4 5 5.96% 6.09% (Round to the nearest cent.) - X
- 1. Bond problem 1. Solve for the missing parameters "?" using Excel; show spreadsheet work: a) Number of Periods: ? Rate of Return: 18% Coupon Rate: 12% Market Price: $13,767.90 Face Value: $50,000.00 b) Coupon Rate: ? Periods: 5 Payment: $1000 Market Price: $15,000 Face Value: $10,000 c) Face Value: ? Rate of Return: 20% Periods: 5 Coupon Rate: 6.5% Market Price: $1,000f10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 9%, the maturity risk premium on all 10- ear bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T- Donds, what is the default risk premium on the corporate bond? Select the correct answer. O a. 2.64% O b. 2.16% Oc2.88% d. 2.40% e. 3.12%Bond Coupon Rate (%) Number of Years to Maturity Price TII $884.20 $948.90 $967.70 $456.39 W X Y 7 8 9 0 5 7 4 10 Calculate the yield to maturity for the four bonds. SOLCE USING BA2 CALC.
- MCQ: Yield on bond is 7% and market required return is 14% then market risk premium is 1. 2% 2. 21% 3. 0.50% 4. 7%(C) Calculate the yield-to-maturity (YTM) and current yield for each of the bonds below. Coupon rate (%) per period 9% annually 3% semi-annually 12% quarterty Years to Вond Par Value Market Price maturity 8. RM1,000 RM100 RM500 RM820 RM118 RM560 Y 12points You are eyeing an investment in a corporate bond which has a YTM of 11.35%, and a stated rate of interest of 9.91% with a maturity of 100 years. What is the price of this bond? Selected Answer: [None Given] Answers: a. $873.13