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18-4 [5 pts] The Florida Investment Fund buys bonds of the Gator Corporation through a broker. The bonds pay 10 percent annual interest.

 

18-4 [5 pts]     The Florida Investment Fund buys bonds of the Gator Corporation through a broker. The bonds pay 10 percent annual interest. The yield to maturity (market rate of interest) is 12 percent. The bonds have a 10-year maturity.

        

a.  By how much did the company's retained earnings increase?

b.  With 100 million shares outstanding and a stock price of $101, what was the dividend yield? (Hint: First compute dividends per share.)

Top Answer

a.The par value of bond $1,000 Price of Bond=C(1-(1+r) -n /r]+A(1+r) -n =12%*1000 (1-(1+.10) -10... View the full answer

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