Question

A certain insurance company wants to raise $34 million in order to build a new headquarters. The company will fund this by issuing 10-year bonds with a face value of $1,000 and a coupon rate of 6.5%, paid semiannually. The table below shows the yield to maturity for similar 10-year corporate bonds of different ratings.

Security | AAA Corporate | AA Corporate | A Corporate | BBB Corporate | BB Corporate |
---|---|---|---|---|---|

Yield (%) | 6.20% | 6.40% | 6.70% | 7.00% | 7.50% |

How many more bonds would the insurance company have to sell to raise this money if their bonds received an A rating rather than an AA rating? (Round your answer to the nearest integer.)

bonds

Answer #1

a
company wants to raise 30 million dollars to build a new
headquarter. It will fund this by issuing a 10-year bond with a
face value of $1,000 and a coupon rate of 6.3% paid semiannually.
the table below shows the yield to maturity for similar 10-year
corporate bonds of different ratings. Which of the following is
closest to how many more bonds the company would have to sell to
raise this money if their bonds received a BBB rating...

HMK Enterprises would like to raise $10 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1000 and a coupon rate of 6.5% (annual
payments). The following table summarizes the yield to maturity for
five-year (annual-pay) coupon corporate bonds of various
ratings:
Rating
AAA
AA
A
BBB
BB
YTM
6.20%
6.30%
6.50%
6.90%
7.50%
a. Assuming the bonds will be rated AA, what will the price of
the bonds be?
b....

HMK Enterprises would like to raise $10.0 million for to invest
in capital expenditures. The company plans to issue five year bonds
with a face value of $1000 and a coupon rate of 6.53% (annual
payments) The following table summarizes the yield to maturity for
five-year (annual payments) coupon corporate bonds of various
ratings:
Rating AAA AA A BBB BB
YTM 6.19% 6.31% 6.53% 6.96% 7.58%
a. Assuming the bonds will be rated AA what will be the price of...

HMK Enterprises would like to raise $10.0 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1,000 and a coupon rate of 6.59% (annual
payments). The following table summarizes the yield to maturity
for five-year (annual-payment) coupon corporate bonds of various
ratings:
Rating
AAA
AA
A
BBB
BB
YTM
6.16%
6.38%
6.59%
6.91%
7.54%
a. Assuming the bonds will be rated AA, what will be the price
of the bonds?
b....

HMK Enterprises would like to raise $10.0 million to invest in
capital expenditures. The company plans to issue five-year bonds
with a face value of $1,000 and a coupon rate of 6.59% (annual
payments). The following table summarizes the yield to maturity
for five-year (annual-payment) coupon corporate bonds of various
ratings.
Rating
AAA
AA
A
BBB
BB
YTM
6.19%
6.39%
6.59%
6.98%
7.58%
a. Assuming the bonds will be rated AA, what will the price of
the bonds be?
b....

1. HMK Enterprises would like to
raise $10 million to invest in capital expenditures. The company
plans to issue five-year bonds with a face value of $1000 and a
coupon rate of 6.5% (annual payments). The following table
summarizes the yield to maturity for five-year (annual pay) coupon
corporate bonds of various ratings.
Rating
AAA
AA
A
BBB
BB
YTM
6.20%
6.30%
6.50%
6.90%
7.50%
a. Assuming the bonds will be rated
AA, what will the price of the bonds...

(Cost of debt) Tellington Inc. recently discussed issuing a
7-year-maturity bond issue with the firm's investment banker. The
firm was advised that it would have to pay 3.00 to 4.00 percent on
the bonds. Using information in the popup window, LOADING...,
what does this rate suggest to you about the firm's default
rating?
Corporate Bond Yields: Default Ratings and Term to
Maturity
Rating
1 yr
2 yr
3 yr
5 yr
7 yr
10 yr
30 yr
Aaa/AAA
0.22
0.31...

King Leopold Prawn Farming Ltd plans to raise $3 million to
build a new prawn farm near Broome in Western Australia. It will
issue bonds with a term to maturity of 15 years. The face value per
bond will be $1,000 and the coupon rate will be 8% per annum, paid
semi-annually. Similar corporate bonds are trading at a yield to
maturity of 10% per annum, compounded semi-annually. It is expected
that these new bonds will trade at this rate....

You are calculating the cost of capital for Drill Corp. The
firm's capital structure consisted of operating leases, two bonds,
and equity. The operating lease has a debt value of $500 million.
The first bond is a simple 30-year semiannual coupon paying bond
with a book value of $200 million and market value of $125 million.
The second is a zero-coupon bond with 10 years to maturity and $500
million face value. The firm's equity has a book value of...

How do you calculate the cost of debt of each division(Food
processing and instruments) for chestnut using proxy companies in
same industry.
Exhibit 14.4 Finiancial Data for Industry
Comparables, December 2013 (dollar figures in millions)
S&P Bond
Total Equity
Total Equity
Equity Beta
Rating
Total Debt
(Book value)
(Market Value)
Chestnut Foods
0.9
A-
461
1,544
1,840
Food Processing Industry
Boulder Brands
0.55
B+
298
355
958
Campbell Soups
0.6
BBB+
4,832
1,349
13,223
ConAgra Foods
0.7
BBB-
9,590
5,472
13,805...

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