Preston Corporation has a bond outstanding with an annual interest payment of $90, a market price...

Preston Corporation has a bond outstanding with an annual interest payment of $90, a market price of $1,280, and a maturity date in 7 years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

A. Coupon rate

B. Current Yield

C-1. Approximate yield to maturity

C-2. Exact yield to maturity

Expert Solution

Calc:

jeff jeffy answered 2 years ago

Preston Corporation has a bond outstanding with an annual interest payment of $100, a market price...

Preston Corporation has a bond outstanding with an annual interest payment of $100, a market price of $1,300, and a maturity date in 6 years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Coupon Rate...

Preston Corporation has a bond outstanding with an annual interest payment of $110, a market price...

Preston Corporation has a bond outstanding with an annual interest payment of $110, a market price of $1,320, and a maturity date in 8 years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) a. Coupon rate b....

The Pioneer Petroleum Corporation has a bond outstanding with an $90 annual interest payment, a market...

The Pioneer Petroleum Corporation has a bond outstanding with an $90 annual interest payment, a market price of $910, and a maturity date in five years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) a. Coupon...

The Pioneer Petroleum Corporation has a bond outstanding with an $60 annual interest payment, a market...

The Pioneer Petroleum Corporation has a bond outstanding with an $60 annual interest payment, a market price of $880, and a maturity date in eight years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use a calculator or Excel to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) a. Coupon...

Sally Inc has a bond outstanding with a $70 interest payment, a market price of $860,...

Sally Inc has a bond outstanding with a $70 interest payment, a market price of $860, and a maturity date in five years. Par value is $1,000. what is the approvimate yield to maturity?

A 10-year annual payment corporate bond has a market price of $1,050. It pays annual interest...

A 10-year annual payment corporate bond has a market price of $1,050. It pays annual interest of $100 and its required rate of return is 9 percent. Is the bond fairly priced, underpriced, or overpriced? Also find the magnitude of the mispricing (if any).

Riverhawk Corporation has a bond outstanding with a market price of $1,200.00. The bond has 10...

Riverhawk Corporation has a bond outstanding with a market price of $1,200.00. The bond has 10 years to maturity, pays interest semiannually, and has a yield to maturity of 9%. What is the bond’s coupon rate? A. 12.84% B. 12.08% C. 13.61% D. 11.31% E. 9.77% F. 10.54%

A bond of Visador corporation pays $90 in annual interest, with a $1000 par value. The...

A bond of Visador corporation pays $90 in annual interest, with a $1000 par value. The bonds mature in 18 years. The market's required yield to maturity on a comparable-risk bond is 7.5 percent. A. Calculate the value of the bond. B. How does the value change if the market's required yield to maturity on a comparable0risk bond (i) increases to 13 percent or (ii) decreases to 4 percent? C. Interpret your findings in parts a and b.

The Rowan Corp has two bond issues outstanding. Both bonds pay $90 annual interest plus $1,000...

The Rowan Corp has two bond issues outstanding. Both bonds pay $90 annual interest plus $1,000 at maturity. Bond 1 has a maturity of 30 years, and Bond 2 has a maturity of 5 year. What will be the value of each of these bonds when the going rate of interest is 5% 10% 15% 20% Using Microsoft Excel’s relevant functions, calculate the bond prices. Create a table to summarize your results. Prepare a graph displaying your results. Make sure...

A bond has an annual 11 percent coupon rate, an annual interest payment of $110, a...

A bond has an annual 11 percent coupon rate, an annual interest payment of $110, a maturity of 20 years, a face value of $1,000, and makes annual payments. It has a yield to maturity of 8.83 percent. If the price is $1,200, what rate of return will an investor expect to receive during the next year? a. -0.33% b. 8.83% c. 9.17% d. 11.00% None of the above

Question