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A 15-year, 6% semiannual coupon bond with a par value of $1,000 may be called in 7 years at a call price of $1,090. The

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A 15-year, 6% semiannual coupon bond with a par value of $1,000 may be called in 7 years at a call price of $1,090. The bond sells for $1,100. INPUT VALUES: Par value = $1,000 Years to maturity = 1 mark Years to call = Selling Price = Coupon Rate = Payment = 1 mark a. What is the bond's yield to maturity? 1 mark b. What is the bond's current yield? 2 marks c. What is the bond's yield to call? d. How would the price of the bond be affected by a change in the going market interest rates? 2 marksPolly Pies Inc. is planning an initial public offering (IPO). The deal will be underwritten with opening stock price set at $29 per share. The investment bank will charge a 3.5% spread. Direct costs will be $375,000. a. How many shares must the firm sell to net $18 million? 3 marks Spread = charge by investment Place your final answer here: bank for their services. It is the Offer Price Direct costs S 375,000 difference between price paid Spread Net Amt $18,000,000 Proceeds per share = (1 - spread)(share price) = to issuing company and price at which shares are sold to the Required proceeds after direct costs public. # Shares = Req'd Proceeds / Proceeds per share See page 434 for an example. b. If the stock price closes the first day at $33, how much cash has the firm left on the table? 1 mark Place your final answer here: Closing price = Amount left on table = (Closing price - offer price)(Number of shares) The first day of trading can Amount left on table = produce significant stock price fluctuations. In Canada most c. What are the firm's total costs (direct, indirect and underwriting) for the IPO? 2 marks first-day returns fall between Place your final answer here: 3.6% to 11.6%. See page 434 Underwriting cost = (spread)(Offer Price)(# Shares) for some examples of First- Underwriting cost = Day IPO Returns. Indirect costs = amt left on table = Total Costs = (Direct costs) + Underwriting cost + Amount left on table Total Costs = d. What are the typical steps involved in issuing an Initial Public Offering (IPO)? 2 marks e. Find an example of a Canadian or American company that had their IPO sometime during the last 2 years. Provide a short overview of the company including the name of their CEO, as well as a discussion about the expectations prior to the IPO, the results of the first-day and their current share price. Your answer should be 1-2 paragraphs in length and use a minimum of two sources that are cited at the bottom of your answer in APA format. 6 marks

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