A bond that pays interest forever and has no maturity is a ...
Solutions Guide: Please do not present as your own. This is only meant as a solutions guide for you to answer the problem on your own. I recommend doing this with any content you buy online whether from me or from someone else.
A bond that pays interest forever and has no maturity is a perpetual bond. In what respect is a perpetual bond similar to a no-growth common stock? Are there preferred stocks that are evaluated similarly to perpetual bonds and other preferred stocks that are more like bonds with finite lives? Explain.
A perpetual bond is similar to a no-growth stock and to a share of perpetual preferred stock in the following ways:
1. All three derive their values from a series of cash inflows—coupon payments from the perpetual bond, and dividends from both types of stock.
2. All three are assumed to have indefinite lives with no maturity value (M) for the perpetual bond and no capital gains yield for the stocks.
However, there are preferreds that have a stated maturity. In this situation, the preferred would be valued much like a bond with a stated maturity. Both derive their values from a series of cash inflows—coupon payments and a maturity value for the bond and dividends and a stock price for the preferred.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- what is a loan maturity date
- banks that pays 5 interest
- investment that pays monthly income
- what is a series ee bond worth
- annuity that pays 7 guaranteed
- what is a maturity date
- question that has no answer
- stock that pays best dividends
- a word that has two meaning
- no problem is a problem
- banks that pays best interest
- interest rates and bond price