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You cannot calculate it here, but you have the information that even though the company paid a coupon of 5€, the price of the bond went up. However, when the YTM increases, it usually causes the price of the bond to go down. (Nonetheless, here you can get that answer C is the right one)
basically you take the debt-to-equity ratio divided by itself plus 1, for instance: debt-to-equity 1.5 (debt is 1.5 times as large as equity), so 1.5/(1.5+1)= 60% for rd and thus 40% for re. same procedure here in 3: 1/(1+1)= 0.5 for both rd and re. so not just dividing by 2, you might get to a another percentage as a result - if you take the debt-to-equity of 1.5 as an example
I have seen this in many summaries, this is not true. The buyer is only willing to pay the bid price and the marketmaker cannot get the difference between the bid and ask. This would mean that the buyer pays more than he is willing to do and the seller gets less money than he wants to get.
Hey there. In these kind of exercises always look out for specific keywords. Here they mention the word forever which leads us to a perpetuity formula. This combined with an IRR calculation where the NPV of a project is 0 gives us the following: NPV=-Investment+PV(Perpetuity) --> 0=-Investment+1500/0,05. If we solve this for the investment, we get to 30000. As we get 1500 per year, it takes 20 years until we have our investment back. Hope that clarifies it :)
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The final answer for that task is right as it is supposed to be 57% and 43%, but the process is wrong because you don't get 57 if you follow that calculation (you always get -15,64 or -58,43 instead of 57)
1 week ago
The hero who put all the answers online for the exercises of the tutorials under the name ''ALL YOU NEED TUTORIAL ...'', you're the GOAT. Could you perhaps also upload them for the upcoming tutorials? Thanks in advance!
Hey Lucie. What we do here is a Future Value calculation for which we use the following Forumla: FV=PV*(1+r)^n. Our FV is 2000, PV 1000 and r is 5%. Thus, we get to 2000=1000*1,05^n. We can simplify this to 1,05^n=2, then apply the logarithm and get no n= ca.14,2. Hope this helps you :)