Question

Sasha Stills is an investor with $100,000 cash looking to buy some bonds on the market...

Sasha Stills is an investor with $100,000 cash looking to buy some bonds on the market and heard that the market return for tech bonds was 14%. Orion Corporation issued bonds to the market not long ago totaling $100,000 at a 15% stated rate. Does Sasha have enough cash to purchase Orion Corporation’s bonds? Why or why not?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sasha have not enough cash to purchase Orion corporation's Bonds.

When coupon rate(stated rate) is more than market return (yield rate) then Bonds price would be more than its face value.

In given case,

Face of Bond = $100,000

State rate (Coupon rate) = 15%

Market return (YTM) = 14%

Thus, Price of Bond would be higher than $100,000.

Sasha stills have cash of $100,000 thus she have not enough cash to purchase said bond.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Companies raise capital to finance their capital expenditures and their operations. Investors who purchase common equity...
Companies raise capital to finance their capital expenditures and their operations. Investors who purchase common equity (common stock) of a corporation do so in the hope that the company which they have invested in prospers so that this company can afford to pay out cash dividends to its common shareholders, and these common stock investors also hope that as the company prospers the company increases in its market value so that its common equity will be worth more. Investors who...
1. What happens to the prices of bonds as the market rate of interest increases? Doubles...
1. What happens to the prices of bonds as the market rate of interest increases? Doubles Decreases Increases Stays the same 2. Why do long-term bonds typically have higher coupon rates shorter-term bonds? They have a higher rate of return. They are a lower tax risk. More investors want to buy them. They are riskier investments. Entries for Issuing Bonds Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. issued $270,000 of 20-year, 7% bonds on...
1.     Tennessee Water has $1,000 par value bonds outstanding at 5% interest. The bonds will  mature in 20...
1.     Tennessee Water has $1,000 par value bonds outstanding at 5% interest. The bonds will  mature in 20 years. Compute the current price of the bonds if the present yield to maturity is 7% 2.    Exodus Company has $1,000 par value bonds outstanding at 6% interest. The bonds will mature in 15 years. Compute the current price of the bonds if the current interest rate is 4%. 3.     The preferred stock of Ultra Corporation pays an annual dividend of $7.00. It has a required...
1.  T-bill yield a. Determine how the annualized yield of a T-bill would be affected if the...
1.  T-bill yield a. Determine how the annualized yield of a T-bill would be affected if the purchase price is lower. Explain the logic of this relationship. b. Determine how the annualized yield of a T-bill would be affected if the selling price is lower. Explain the logic of this relationship. c. Determine how the annualized yield of a T-bill would be affected if the number of days is shorter, holding the purchase price and selling price constant. Explain the logic...
True/False All else the same, if a company’s interest rate on its borrowings goes down, its...
True/False All else the same, if a company’s interest rate on its borrowings goes down, its coverage ratio will go up. Banks receive interest on their customer deposits. Banks are required to pay interest on all deposits. Certificates of Deposit are a type of time deposit. Certificates of Deposit are a type of demand deposit Corporate profits tax is applied to a corporation’s profits after dividends have been subtracted. You can buy a company’s stock when the company issues shares...
Question 1 ____is the chance of loss or the variability of returns associated with a given...
Question 1 ____is the chance of loss or the variability of returns associated with a given asset. Question 2 Baxter purchased 100 shares of Sam, Inc. common stock for $135 per share one year ago. During the year, Sam, Inc paid cash dividends of $6 per share. The stock is currently selling for $170. If Baxter sells all his shares today, what rate of return would be realized? Question 3 A beta coefficient of +1 represents an asset that… Question...
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
1. Stock XYZ is currently trading at $35.48. You want to enter the market at $33....
1. Stock XYZ is currently trading at $35.48. You want to enter the market at $33. All of the following orders can be used EXCEPT (1 point): Stop buy Stop sell Market Limit sell 2. Oak Street Health went public on August 6, 2020 with an IPO price of $21 per share. Go to Yahoo Finance, obtain the closing price on its first trading day and calculate the IPO underpricing (1 point): 149.5% 190.5% 90.5% 49.5% 3. You want to...
QUESTION 11 Mutual funds that carefully select stocks and bonds--relying on smart managers' skills--generally outperform passive,...
QUESTION 11 Mutual funds that carefully select stocks and bonds--relying on smart managers' skills--generally outperform passive, index funds, even though they charge higher fees. True False 5 points    QUESTION 12 If you wanted to buy shares of common stock in IBM, what market would you make a purchase in? New York Stock Exchange S&P 500 Tokyo Stock Exchange Nasdaq 5 points    QUESTION 13 All else equal, an adjustable rate mortgage is riskier to the borrower than a fixed...
In February 2012, the Pepsi Next product was launched into the US market. This case study...
In February 2012, the Pepsi Next product was launched into the US market. This case study provides students with an interesting insight into PepsiCo’s new product process and some of the challenging decisions that they faced along the way. Pepsi Next Case Study Introduction Pepsi Next was launched by PepsiCo into the US market in February 2012, and has since been rolled out to various international markets (for instance, it was launched in Australia in September 2012). The new product...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT