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In: Finance
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 12 percent...
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 12 percent that can be called in one year. The bond makes annual coupon payments and has a par value of $1,000. The call premium is set at $145 over par value. There is a 60 percent chance that the interest rate in one year will be 14 percent, and a 40 percent chance that the interest rate will be 9 percent. If the current interest rate is 12 percent, what is the current market price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Solutions
jeff jeffy answered 1 month agoRelated Solutions
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 12 percent...
New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 12 percent that can be called in one year.
The bond makes annual coupon payments. The call premium is set at
$170 over par value. There is a 60 percent chance that the interest
rate in one year will be 14 percent, and a 40 percent chance that
the interest rate will be 9 percent. If the current interest rate
is 12 percent, what is the...
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 12 percent...
New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 12 percent that can be called in one year.
The bond makes annual coupon payments. The call premium is set at
$120 over par value. There is a 60 percent chance that the interest
rate in one year will be 14 percent, and a 40 percent chance that
the interest rate will be 9 percent. If the current interest rate
is 12 percent, what is the...
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 9 percent...
New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 9 percent that can be called in one year. The
bond makes annual coupon payments and has a par value of $1,000.
The call premium is set at $150 over par value. There is a 60
percent chance that the interest rate in one year will be 11
percent, and a 40 percent chance that the interest rate will be 7
percent.
If the current interest...
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 11 percent...
New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 11 percent that can be called in one year.
The bond makes annual coupon payments. The call premium is set at
$165 over par value. There is a 60 percent chance that the interest
rate in one year will be 13 percent, and a 40 percent chance that
the interest rate will be 8 percent. If the current interest rate
is 11 percent, what is the...
New Business Ventures, Inc., has an outstanding perpetual bond with a coupon rate of 10 percent...
New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 10 percent that can be called in one year.
The bond makes annual coupon payments. The call premium is set at
$110 over par value. There is a 60 percent chance that the interest
rate in one year will be 12 percent, and a 40 percent chance that
the interest rate will be 7 percent. If the current interest rate
is 10 percent, what is the...
Corporation has an outstanding bond with a coupon rate of 8.55 percent that matures in 12...
Corporation has an outstanding bond with a coupon rate of 8.55
percent that matures in 12 years. The bond pays interest
semiannually. What is the market price of a $1,000 face value bond
if the yield to maturity is 10.13 percent?
(Bond price) Jump Inc has a level-coupon bond outstanding that pays 12% coupon rate and has...
(Bond price) Jump Inc has a level-coupon bond outstanding that
pays 12% coupon rate and has 10 years to maturity. The face value
of the bond is $1000. If the yield to maturity for similar bonds is
currently 14%
a. What is the bond’s current market value if the bond pays
coupons annually?
b. What is the bond’s current market value if the bond pays
coupons semi-annually?
c. What is the bond’s current market value if the bond pays 14%...
Whatever, Inc., has a bond outstanding with a coupon rate of 5.87 percent and semiannual payments....
Whatever, Inc., has a bond outstanding with a coupon rate of
5.87 percent and semiannual payments. The yield to maturity is 6.9
percent and the bond matures in 13 years. What is the market price
if the bond has a par value of $1,000?
Otobo, Inc., has a bond outstanding with a coupon rate of 5.0 percent and semiannual payments....
Otobo, Inc., has a bond outstanding with a coupon rate of 5.0
percent and semiannual payments. The yield to maturity is 9.9
percent and the bond matures in 14 years. What is the market price
if the bond has a par value of $6000?
Too Young, Inc., has a bond outstanding with a coupon rate of 7.1 percent and semiannual...
Too Young, Inc., has a bond outstanding with a coupon rate of
7.1 percent and semiannual payments. The bond currently sells for
$1,891 and matures in 17 years. The par value is $2,000. What is
the company's pretax cost of debt?
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