Axiom Consolidated Bonds have a 5.5% coupon rate and a $1,000 par value. They mature in...

Axiom Consolidated Bonds have a 5.5% coupon rate and a $1,000 par value. They mature in 12 years and pay interest annually. Their YTM is currently 6%. A. Calculate the duration of the Bonds (you may want to use Excel here). B. Would these Bonds be appropriate to include in your portfolio if you expect interest rates to rise? Explain.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

EXPECTED INTEREST RATE Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature...

EXPECTED INTEREST RATE Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 20 years, are callable 4 years from today at $1,050. They sell at a price of $1,258.68, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to two decimal places. years If Lourdes plans to raise additional capital and wants to...

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years, are callable 5 years from today at $1,025. They sell at a price of $1,284.95, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? It is now January 1, 2019, and you are considering the purchase of an outstanding bond that was issued on January...

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years, are callable 3 years from today at $1,050. They sell at a price of $1,218.85, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to two decimal places. 7.57 years If Lourdes plans to raise additional capital and wants to use debt...

Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years,...

Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from today at $1,050. They sell at a price of $1,353.54, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. b. If Lloyd plan to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

A bond with a $1,000 par value has a 4% annual coupon rate. Itwill mature...

A bond with a $1,000 par value has a 4% annual coupon rate. It will mature in 4 years, and annual coupon payments are made at the end of each year. Present annual yields on similar bonds are 3.5%. What is the current price?

A $1,000 par value bond with an annual 8% coupon rate will mature in 10 years....

A $1,000 par value bond with an annual 8% coupon rate will mature in 10 years. Coupon payments are made semi-annually. What is the market price of the bond if the required market rate is 6%? (See Appendix G.)

A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in...

A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in 6 years. Current market yield for this bond is 7%. If the coupon is paid semi-annually, what would be the value of this bond? Group of answer choices $951.68 $682.29 $973.36 $952.33

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years.

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years. The bonds currently sell for $1,230.51 in the market. What is the bond Yield-to-Maturity (YTM) ?

A firm’s outstanding bonds have a $1,000 par value, are investment grade and mature in 6...

A firm’s outstanding bonds have a $1,000 par value, are investment grade and mature in 6 years. These bonds pay interest semiannually with a coupon of 8.0%. Assume that bond sells for $955.00. (a) What is the Yield-to-Maturity (YTM) bond? (b) What is the bond’s Current Yield? (c) What is the bond’s Capital Gains Yield? (d) Now, suppose the bond is trading at $1,150 and that the bond is callable in 2 years from now, at a call premium of...

O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their...

O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal annual, not semiannual yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $700. What is the bond's nominal coupon interest rate? 6.15% 6.58% 7.01% 5.72% 4.86%

Subjects