Question

Madsen Motors's bonds have 22 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7.5%; and the yield to maturity is 10%. What is the bond's current market price? Round your answer to the nearest cent.

A bond has a $1,000 par value, 12 years to maturity, and a 9% annual coupon and sells for $1,110.

• What is its yield to maturity (YTM)? Round your answer to two decimal places.

• Assume that the yield to maturity remains constant for the next 3 years. What will the price be 3 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.

Nesmith Corporation's outstanding bonds have a $1,000 par value, an 10% semiannual coupon, 13 years to maturity, and an 8% YTM. What is the bond's price? Round your answer to the nearest cent.

A firm's bonds have a maturity of 10 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 5 years at $1,052.28, and currently sell at a price of $1,101.00. What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. What is their nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.What return should investors expect to earn on these bonds?

• Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM.

• Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC.

• Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC.

• Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM.

• Investors would expect the bonds to be called and to earn the YTC because the YTM is less than the YTC.

An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in 11 years, while Bond S matures in 1 year.

Assume that only one more interest payment is to be made on Bond S at its maturity and that 11 more payments are to be made on Bond L.

• What will the value of the Bond L be if the going interest rate is 6%? Round your answer to the nearest cent.What will the value of the Bond S be if the going interest rate is 6%? Round your answer to the nearest cent.What will the value of the Bond L be if the going interest rate is 9%? Round your answer to the nearest cent.What will the value of the Bond S be if the going interest rate is 9%? Round your answer to the nearest cent.What will the value of the Bond L be if the going interest rate is 11%? Round your answer to the nearest cent.What will the value of the Bond S be if the going interest rate is 11%? Round your answer to the nearest cent.Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?

An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in 11 years, while Bond S matures in 1 year.

Assume that only one more interest payment is to be made on Bond S at its maturity and that 11 more payments are to be made on Bond L.

• What will the value of the Bond L be if the going interest rate is 6%? Round your answer to the nearest cent.What will the value of the Bond S be if the going interest rate is 6%? Round your answer to the nearest cent.What will the value of the Bond L be if the going interest rate is 9%? Round your answer to the nearest cent.What will the value of the Bond S be if the going interest rate is 9%? Round your answer to the nearest cent.What will the value of the Bond L be if the going interest rate is 11%? Round your answer to the nearest cent.What will the value of the Bond S be if the going interest rate is 11%? Round your answer to the nearest cent.Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?

Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%.

• What is the yield to maturity at a current market price of$855? Round your answer to two decimal places.
  $1,131? Round your answer to two decimal places.Would you pay $855 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if rd = 13%?

A 7% semiannual coupon bond matures in 6 years. The bond has a face value of $1,000 and a current yield of 7.7535%.What is the bond's price? Do not round intermediate calculations. Round your answer to the nearest cent.What is the bond's YTM?

Answer 1

SORRY ONLY ONE ALLOWED YET ANSWERED FOUR

Madsen Motors's bonds have 22 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7.5%; and the yield to maturity is 10%. What is the bond's current market price? Round your answer to the nearest cent.

=PV(10%,22,-7.5%*1000,-1000)
=780.7115

A bond has a $1,000 par value, 12 years to maturity, and a 9% annual coupon and sells for $1,110. What is its yield to maturity (YTM)? Round your answer to two decimal places.

=RATE(12,9%*1000,-1110,1000)
=7.5725%

Assume that the yield to maturity remains constant for the next 3 years. What will the price be 3 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.

=PV(RATE(12,9%*1000,-1110,1000),9,-9%*1000,-1000)
=1090.7803

Nesmith Corporation's outstanding bonds have a $1,000 par value, an 10% semiannual coupon, 13 years to maturity, and an 8% YTM. What is the bond's price? Round your answer to the nearest cent.

=PV(8%/2,13*2,-10%*1000/2,-1000)
=1159.8277