The Par Value of Inferno, Inc

question 36

Essay

The par value of Inferno, Inc. common stock is $0.50, the earnings per share is $6,
and it trades at a P/E of 15. What is Inferno, Inc.'s stock price?

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Definitions:

Coupon Interest Rate

Stated rate of interest on a bond, defined as the coupon payment divided by the par value.

Market Value

Market value is the current price at which an asset or company can be bought or sold in the marketplace, reflecting the value the market places on it.

Call Provision

Gives the issuing corporation the right to call the bonds for redemption. The call provision generally states that if the bonds are called, the company must pay the bondholders an amount greater than the par value, a call premium. Most bonds contain a call provision.

Bondholders

Investors or entities that hold bonds issued by corporations or governments, entitled to receive the bond's face value and interest payments.