In: Finance
1. Yield to Maturity and Required Returns
The Brownstone Corporation's bonds have 5 years remaining to...
1. Yield to Maturity and Required Returns
The Brownstone Corporation's bonds have 5 years remaining to
maturity. Interest is paid annually, the bonds have a $1,000 par
value, and the coupon interest rate is 10%.
- What is the yield to maturity at a current market price of
$835? Round your answer to two decimal places ___%
- What is the yield to maturity at a current market price of
$1,100? Round your answer to two decimal places.___%
2. Bond Valuation and Interest Rate Risk
The Garraty Company has two bond issues outstanding. Both bonds
pay $100 annual interest plus $1,000 at maturity. Bond L has a
maturity of 15 years, and Bond S has a maturity of 1 year.
- What will be the value of each of these bonds when the going
rate of interest is 6%? Assume that there is only one more interest
payment to be made on Bond S. Do not round intermediate
calculations. Round your answers to the nearest cent. Bond
L: $ Bond S: $
- What will be the value of each of these bonds when the going
rate of interest is 9%? Assume that there is only one more interest
payment to be made on Bond S. Do not round intermediate
calculations. Round your answers to the nearest cent. Bond
L: $ Bond S: $
- What will be the value of each of these bonds when the going
rate of interest is 11%? Assume that there is only one more
interest payment to be made on Bond S. Do not round intermediate
calculations. Round your answers to the nearest cent. Bond
L: $ Bond S: $