Consider the following data concerning four corporate bonds, all of which have a face value of...

Consider the following data concerning four corporate bonds, all of which have a face value of $1,000 and have semiannual compounding:

Bond 1 2 3 4

YTM 8.0% 7.5% 8.5% 8.5%

Coupon Rate 8.0% 7.0% 9.0% 9.0%

Years until Maturity 5 10 10 20

Which of these bonds is currently priced at a discount?

Expert Solution

jeff jeffy answered 2 hours ago

Which of the following is true of bonds? a Since bonds have a face value of...

Which of the following is true of bonds? a Since bonds have a face value of $1,000, they can be purchased at any time for $1,000. b Once purchased, bonds cannot be sold and must be held until maturity. c Investors in bonds are part owners of the corporation that issued the bonds. d For the corporation that issues bonds, bonds are a way to fund its assets.

Consider a 10% corporate bond maturing in exactly 12 months. The bonds face value is $1,000...

Consider a 10% corporate bond maturing in exactly 12 months. The bonds face value is $1,000 and is trading to yield 12%. Please solve the following with work. a) Duration b) Convexity c) Modified Duration d) Dollar Duration

4)Consider two $27,000 face value corporate bonds. Bond A is currently selling for $26,946 and...

4)Consider two $27,000 face value corporate bonds. Bond A is currently selling for $26,946 and matures in 18 years. Bond B sells for $25,245 and matures in 3 years. Calculate the current yield for both bonds if both have a coupon rate equal to 4%. (Assume a yearly coupon payment). 1)Current yield Bond A to 2 decimal places 2)Current yield Bond B to 2 decimal places 3)YTM Bond A to 2 decimal places 4)YTM Bond B to 2 decimal...

Assuming that all bonds have a face value of $1,000 and a yield to maturity of...

Assuming that all bonds have a face value of $1,000 and a yield to maturity of 8%, which of the following bonds will have the highest degree of price interest rate risk? A bond with 8% coupon rate that matures in 15 years. A bond with 6% coupon rate that matures in 15 years. A bond with 8% coupon rate that matures in 30 years. A bond with 6% coupon rate that matures in 30 years.

Consider two corporate bonds. Both bonds pay annual interest and have face values of $1000. Bond...

Consider two corporate bonds. Both bonds pay annual interest and have face values of $1000. Bond X matures in 10 years, has 5% annual coupons and currently has 5% YTM. Bond Y matures in 15 years, had 5% annual coupons, and currently had 5% YTM. If the market rate of interest drops unexpectedly to 4%, what will happen to the prices of the bonds? A. The price of both bonds will rise by the same dollar B. The price of...

Which of the following bonds will have the smallest percentage increase in value if all market...

Which of the following bonds will have the smallest percentage increase in value if all market interest rates decrease by 1%? A. 20-year, zero coupon bond. B. 10-year, zero coupon bond. C. 20-year, 10% coupon bond. D. 20-year, 5% coupon bond. E. 1-year, 10% coupon bond.

Watson consulting, llc is a consultancy to consultants. They have bonds which have a face value...

Watson consulting, llc is a consultancy to consultants. They have bonds which have a face value of $1,000. The bonds carry a 3.5 percent semi-annual coupon, and mature in 10 years. What is the current price of these bonds if the yield to maturity (the going market rate, rd) is 5 percent? $883.08 $813.06 $884.17 $749.04 $594.98

3. Calculate the fair present value of the following bonds, all of which have a 10...

3. Calculate the fair present value of the following bonds, all of which have a 10 percent coupon rate (paid semiannually), face value of $1,000, and a required rate of return of 8 percent. a. The bond has 10 years remaining to maturity. _________ b. The bond has 15 years remaining to maturity. _________ c. The bond has 20 years remaining to maturity. _________ d. What do your answers to parts (a) through (c) say about the relation between time...

1. Which of the following bonds would have the highest percentage change in value if all...

1. Which of the following bonds would have the highest percentage change in value if all interest rates in the economy decrease by 1%? Group of answer choices 20-year, zero coupon bond. 20-year, 5% coupon bond. 10-year, zero coupon bond. 1-year, 10% coupon bond. 20-year, 10% coupon bond. 2. Suppose you are signing a loan contract of $65,000 at an interest rate of 8.5%. You must make 5 equal payments at the end of the year for 5 years. How...

Calculate the fair present value of the following bonds, all of which have a 5 percent...

Calculate the fair present value of the following bonds, all of which have a 5 percent coupon rate (paid semiannually), face value of $1000, and a required rate of return of 8 percent. a. The bond has 10 years remaining to maturity. b. The bond has 15 years remaining to maturity. c. The bond has 20 years remaining to maturity. d. Wha do your answers say about the relationship between time to maturity and present value?

Question