1. A 5-year 5% BB-rated corporate bond’s yield to maturity is 4%. What is the price of the bond? If the bond gets upgraded to AA-, will its yield likely be lower or higher than 4% and lower or higher than 5%? Will the price be likely to go up or down?
2. Maple Booksellers has total receivables of $6,200, which represents 20 days’ sales. Total assets are $220,460. The firm’s operating profit margin is 5.3%. The debt-to-equity ratio is 2. Assume no interest. Find the firm’s asset turnover ratio, ROE, and ROA.
3. A bond with exactly nine years left until maturity offers a 3% annual coupon. The bond, with a YTM of 5%, is priced at 85.784357. What is the price value of a basis point for this bond?