The return an investor earns on a bond over a period of time is known as the holding period return, defined as interest income plus or minus the change in the bond's price, all divided by the beginning bond price. a. What is the holding period return on a bond with a par value of $1,000 and a coupon rate of 5 percent if its price at the beginning of the year was $995 and its price at the end was $910 ? Assume interest is paid annually. Note: Negative value should be indicated by parenthesis. Round your answer to 2 decimal places. Information about three securities appears next. a. Assuming interest and dividends are paid annually, calculate the annual holding period return on each security. Note: Round your answers to 1 decimal place. A company wants to raise $540 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 8 percent underpricing and a 7 percent spread. (Hint: the underpricing is 8 percent of the current stock price, and the spread is 7 percent of the issue price.) a. Assuming the company's stock price does not change from its current price of $79 per share, what would be the issue price to the public after underpricing? How many shares would the company need to sell? Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number of shares" answer in millions. b. How much money will the investment banking syndicate earn on the sale? Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places. Magenta Corporation wants to raise $51.7 million in a seasoned equity offering, net of all fees. Magenta stock currently sells for $13 per share. The underwriters will require a spread of $0.4 per share, and indicate that the issue must be underpriced by 6 percent. In addition to the underwriter's fee, the firm will incur $2,700,000 in legal, accounting, and other costs. How many shares must Magenta sell? Note: Enter your answer in millions rounded to 3 decimal places. Kansas Corporation, an American company, has a payment of 6 million due to Tuscany Corporation one year from today. At the prevailing spot rate of 0.90/$, this would cost Kansas $6,666,667, but Kansas faces the risk that the /$ rate will fall in the coming year, so that it will end up paying a higher amount in dollar terms. To hedge this risk, Kansas has two possible strategies. Strategy 1 is to buy 6.0 million forward today at a one-year forward rate of 0.89/$. Strategy 2 is to pay a premium of $110,000 for a one-year call option on 6 million at an exchange rate of 0.88/$. a. Suppose that in one year the spot exchange rate is 0.85/$. What would be Kansas's net dollar cost for the payable under each strategy? Note: Round your answer to the nearest whole dollar amount. b. Suppose that in one year the spot exchange rate is 0.95/$. What would be Kansas's net dollar cost for the payable under each strategy? Note: Round your answer to the nearest whole dollar amount. Yosemite Corporation has an outstanding debt of $10.05 million on which it pays a 7 percent fixed interest rate annually. Yosemite just made its annual interest payment and has three years remaining until maturity. Yosemite believes that interest rates will fall over the next three years and that floating-rate debt will allow it to reduce its overall borrowing costs. A bank offers Yosemite a three-year interest rate swap with annual payments in which Yosemite will pay LIBOR, currently at 4.4 percent, and receive a 3.9 percent fixed rate on $10.05 million notional principal. Suppose that LIBOR turns out to be 3.8 percent in one year and 3.5 percent in two years. Including interest payments on Yosemite's outstanding debt and payments on the swap, what will be Yosemite's net interest payments for the next three years? Note: Negative values should be indicated by parentheses. The common shares of Twitter, Incorporated (TWTR) recently traded on the NYSE for $73 per share. You have employee stock options to purchase 1,000 TWTR shares for $78 per share. The options expire in three years. Assume that the annualized volatility of TWTR stock is 63 percent and that the interest rate is 2.9 percent. (Assume the options are European options that may only be exercised at the maturity date.) a. Is this option a call or a put? Call Put b. Using an option pricing calculator such as the one at erieri.com/blackscholes. estimate the value of your TWTR options. Note: Round your intermediate calculations to 2 decimal places and final answer to nearest whole dollar. c. What is the estimated value of the options if their maturity is six months instead of three years? Note: Round your intermediate calculations to 2 decimal places and final answer to nearest whole dollar. d. What is the estimated value of the options if their maturity is three years, but TWTR's volatility is 38 percent? Note: Round your intermediate calculations to 2 decimal places and final answer to nearest whole dollar