HMK Enterprises

Ratings: 1 Star2 Stars3 Stars4 Stars5 Stars (5.00 out of 5) - Rate Now!
Loading...

Download Category:

HMK Enterprises.zip - (60.25 KB)
[
HMK Enterprises/HMK Enterprises.xls
HMK Enterprises/Question.txt
HMK Enterprises/Screenshot_1.png
]

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. How much total principal amount of these bonds must HMK issue to raise $10 million today, assuming the bonds are AA rated? (Because HMK cannot issue a fraction of a bond, assume that all fractions are rounded to the nearest whole number.)
• c. What must the rating of the bonds be for them to sell at par?
• d. Suppose that when the bonds are issued, the price of each bond is $959.54. What is the likely rating of the bonds? Are they junk bonds?

Get a fresh solution of this question. Ask it now to our experts.
doubt

Ask Your Question

We have verified professionals who are ready to answer your question.

time

Save Time and Money

We choose experts who can quickly answer your question and that suit your budget.

download

Get Your Answer

Your satisfaction is 100% guaranteed. You can keep on asking questions until you get the answer you need.