1) What are the advantages and limitations generally associated with the use of short-term debt? 2) Explain the meaning of, “The use of current liabilities as opposed to long-term debt exposes the firm to a greater risk of liquidity”. 3) Explain how changes in the interest rate can impact the firm’s working capital policy.
Choose a publicly traded company that issues bonds. You can locate this information by reviewing your chosen company’s annual report online. A good place to start is the Annual Reports website. In your case study, discuss the following aspects of the company. Provide a brief introduction of the company, including its name, headquarters, products/services offered, […]
Suppose you buy a bond that will pay $1000 in ten years along with an annual coupon payment of $50 and the interest rate is 4%. Answer the following questions: What is the value of this bond? Now suppose the bond has no coupon payments but still pays $1000 in ten years. What is the […]
Find the price of the bond. After one year, the bond is selling at a yield to maturity of 5.5%. Find the holding period return if you sell the bond after one year. If you sell the bond after one year, what taxes will you owe? Assume that the tax rate on interest income is 40% […]
