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Path: p Words:0 QUESTION 2 A bond having a face value of $ 1,000, a coupon rate of 10% and a maturity of 10 years is issued by XYZ Corporation. (a) Immediately after the issue the market interest rate falls to 7%. What is the market value of the bond now? Is it a discount, premium or par value bond? (b) If you can purchase the bond for 1,500 what would be the Yield to Maturity of the bond? TTTF Paragraph + Arial 3 (12pt) FEET T* T. fx Mashups . 1 4 4 HTML CSS ck Save and Submit to save and submit. Click Save All Answers to save all answers. Save All ArPath: p Words:0 QUESTION 4 Pecos Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 14%, and the company is certain it will remain at 14% until the bond matures in 15 years. Assuming that the required return does remain at 14% until maturity, find the value of the bond now. What will be the price of the bond after 5 years have passed? What will be the price after 12 years have passed? What trend do you see? TT TT Paragraph + Arial 3 (12pt) fx Mashups . 1 4@+ MCS ave and Submit to save and submit. Click Save All Answers to save all answers. Save All AnswQUESTION 1 What do you understand by the following? You can explain using an example. Please be precise and concise in your answers. (a) What is the term structure of interest rates? How does the market segmentation theory explains the terms structure. (b) Impact of Issuer's risk on the Cost of bond to the issuer. (c) Proxy battle TT TT Paragraph + Arial 3 (12pt) . E . E - T - fx Mashups . 9 6 @ @ f : 3 8 8 8 8 1 8: | HTML CSS Save and Submit to save and submit. Click Save All Answers to save all answers. Save All AnsPath: P Words:0 QUESTION 3 Mohammad is considering purchasing the common stock of Qualcomm Industries, a rapidly growing Chip Manufacturer. He finds that the firm's most recent annual dividend payment was $7 per share. Mohammad estimates that these dividends will increase at a 10% annual rate over the next 4 years and at a rate of 6% for year 5 & 6. At the end of the 6 years he expects the firm's mature product line to result in a slowing of the dividend growth rate to 4% per year for the foreseeable future. Mohammad's required return is 12.5%. Calculate the price of the stock. TT TT Paragraph + Arial 3 (12pt) Din @ fx Mashups - 9 6 HTML CSS Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answ
