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I have worked on it and don't know if my work is correct, I want to know the answer explanation for 1-c 2-a 2-b only,

I have worked on it and don't know if my work is correct, I want to know the answer explanation for 1-c 2-a 2-b only, please image text in transcribed

1. Suppose on 09/18/2020 you observed the following quote for corporate bonds of Home Depot. Assume that the bonds make semi-annual payments. a) Find YTM for the bonds. Use Excel, state your result and Excel function inputs Issue Price Coupon(%) Maturity 93.51 5.875 16-Dec-36 HOME DEPOT INC b) What was the expected rate of investment return on the Home Depot bonds (on 09/18/2020) if they were AA-rated? Explain your answer c) What would be your answer to question b) if you learn that the rating of the bonds were B? Give two estimates, assume that the risk free interest rate is 1% and market risk premium is 10% 2. In mid-2009, Systemico Inc had a market capitalization of $120 billion. It had BBB-rated debt of 35 billion, and its estimated equity beta at the time was 1.25. a) Estimate Systemico's riskiness of the underlying business enterprise (asset beta) b) Estimate Systemico's WACC if risk free rate and market risk premium are 1.5% and 12% respectively. In addition, assume that corporate tax rate is 35%, and the company is 40% financed by risk-free debt 1. Suppose on 09/18/2020 you observed the following quote for corporate bonds of Home Depot. Assume that the bonds make semi-annual payments. a) Find YTM for the bonds. Use Excel, state your result and Excel function inputs Issue Price Coupon(%) Maturity 93.51 5.875 16-Dec-36 HOME DEPOT INC b) What was the expected rate of investment return on the Home Depot bonds (on 09/18/2020) if they were AA-rated? Explain your answer c) What would be your answer to question b) if you learn that the rating of the bonds were B? Give two estimates, assume that the risk free interest rate is 1% and market risk premium is 10% 2. In mid-2009, Systemico Inc had a market capitalization of $120 billion. It had BBB-rated debt of 35 billion, and its estimated equity beta at the time was 1.25. a) Estimate Systemico's riskiness of the underlying business enterprise (asset beta) b) Estimate Systemico's WACC if risk free rate and market risk premium are 1.5% and 12% respectively. In addition, assume that corporate tax rate is 35%, and the company is 40% financed by risk-free debt

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