Question

In: Finance

The next 3 questions refer to the problem below: A corporate bond with a face value...

The next 3 questions refer to the problem below:

A corporate bond with a face value of $1,000 matures in 4 years and has an annual rate of return of 6.25%. The current annual market interest rate is 7%. Interest is paid semi - annually.  

1)What is the present value of only the coupon payments?

Group of answer choices

$31.50

$50.00

$62.50

$214.81

$312.50

$1,000

2)What is the present value of only the bond's face value payable at maturity?

Group of answer choices

0

$62.50

$312.50

$145.40

$759.41

$1,000

3)What is the total bond value (same as the current price of the bond)?

Group of answer choices

$500

$750

$974.22

$1,000

Greater than $1,000

Cannot be determined

Solutions

Expert Solution

Answer is as follows:

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

A 3% callable and convertible corporate bond with a face value of $1,000 and 20 years...
A 3% callable and convertible corporate bond with a face value of $1,000 and 20 years remaining to maturity trades to yield 0.5%. Its conversion ratio is 40. The market value of bond is equal to 104% of the conversion value. The issuer just announced the bond would be called at 110 and simultaneously the market value of the underlying stock increased by 3%. Find the new market value of the bond following the announcement and express it in dollars...
Assume a corporate bond with a $1000 face value matures 3 years and 5 months from...
Assume a corporate bond with a $1000 face value matures 3 years and 5 months from today and has an annual coupon rate of 5% paid semiannually. There is a 20% chance that the issuer will default at maturity. If the firm defaults, it will pay 80% of what is promised (final coupon + face value) at maturity. Treasuries with the same maturity earn a yield to maturity of 3% and investors in these corporate bonds demand a 5% risk...
Bond Valuation A corporate bond has a face value of $1,000. The bond has an 8%...
Bond Valuation A corporate bond has a face value of $1,000. The bond has an 8% coupon rate and it has 13 years to maturity. The interest rate on similar bonds is 6%. Assume interest is paid annually. What is the current price of this bond? Assume everything in #1 above, except the interest rate on similar bonds is 4%. What is the current price of this bond? Assume everything in #1 above, except the interest rate on similar bonds...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4 years. Its coupon is $10 issued at the end of each year. Its price is $1900 right now. The interest rates for bonds and stocks are 2% and 3%, respectively. The market price of stock of this company is $25 right now. And the shares outstanding is 25,000 shares. And the tax rate is 20%. The ratio of debt to equity is 0.2. (30...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4 years. Its coupon is $10 issued at the end of each year. Its price is $1900 right now. The interest rates for bonds and stocks are 2% and 3%, respectively. The market price of stock of this company is $25 right now. And the shares outstanding is 25,000 shares. And the tax rate is 20%. The ratio of debt to equity is 0.2. Suppose...
A corporate bond with a face value of $400,000 selling at a quote of 94.00 today...
A corporate bond with a face value of $400,000 selling at a quote of 94.00 today has a coupon of 5% and matures in 12 years. What is the YTM of this bond? What is its credit spread compared to the Treasury yield of 3.5%? YTM=? Credit Spread=?
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4 years. Its coupon is $10 issued at the end of each year. Its price is $1900 right now. The interest rates for bonds and stocks are 2% and 3%, respectively. The market price of stock of this company is $25 right now. And the shares outstanding is 25,000 shares. And the tax rate is 20%. The ratio of debt to equity is 0.2. (30...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4...
Suppose there is a corporate bond. Its face value is $2000. And the maturity is 4 years. Its coupon is $10 issued at the end of each year. Its price is $1900 right now. The interest rates for bonds and stocks are 2% and 3%, respectively. The market price of stock of this company is $25 right now. And the shares outstanding is 25,000 shares. And the tax rate is 20%. The ratio of debt to equity is 0.2. a....
A corporate bond has a face value of $1,000 and a coupon rate of 5%. The...
A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $950. If the corporation sells more bonds it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? please show all steps in the calculation.
A corporate bond with a face value of $100,000 was issued six years ago and there...
A corporate bond with a face value of $100,000 was issued six years ago and there are four years remaining until maturity. The bond pays semi-annual coupon payments of $4500, the coupon rate is 9% pa paid twice yearly and rates in the marketplace are 9.4% pa compounded semi-annually. What is the value of the bond today? a. $98,975.05 b. $98,196.97 c. $100,000.00 d. $98,691.54 e. $84,263.76
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT