Business Finance Homework Help
Business Finance Homework Help. Case Study ACCOUNTING FINANCE: Bonds, call and sinking fund provisions, determination of value of assets, how are values bonds determined, exercise of value bond x 10 year for $1000, @10% annual coupon and rate return 10%. More exercises on the value of
Presentation, have asked you to help them by answering the following questions.
a. What are the key features of a bond?
b. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky? c. How does one determine the value of any asset whose value is based on expected future cash flows?
d. How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%?
e (1) What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
e (2) What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond?
e(3) What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)
All books( chapters) will be provided for concepts and need to show “step by step” calculations. Will provide “possible” answers for revision and correction.
Business Finance Homework Help
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