Question
In: Finance
company y issues $1 million face value bond that matures in 3 years. the bond has...
company y issues $1 million face value bond that matures in 3 years. the bond has a coupon rate of 6%. the required rate of return is 6% (compounded) semiannually). Calculate the following; (a) the price of the bond today (b) the price elasticity of the bond, assuming that the required rate of return decreases 7.5%. is the elasticity higher or lower when the bond has a lower coupon rate? (c) the modified duration of the bond. use it to estimate the change in the bond price when the required rate of return decreases by 0.5%.
Solutions
Expert Solution
Go
through it, Any doubts, please feel free to ask, Give positive
feedback, Thank you
jeff jeffy answered 2 years agoRelated Solutions
Company Y issues $1 million face value bond that matures in 3 years. The bond has...
Company Y issues $1 million face value bond that matures in 3
years. The bond has a coupon rate of 5%. The required rate of
return is 8% (compounded semiannually). Calculate the
following.
a) The price of the bond today.
b) The price elasticity of the bond, assuming that the required
rate of return increases to 9%. Is the elasticity higher or lower
when the bond has a lower coupon rate?
c) The modified duration of the bond. Use it...
Company Y issues $1 million face value bond that matures in 3 years. The bond has...
Company Y issues $1 million face value bond that matures in 3
years. The bond has a coupon rate of 5%. The required rate of
return is 8% (compounded semiannually). Calculate the following.
a)The price of the bond today.
b)The price elasticity of the bond, assuming that the required
rate of return increases to 9%. Is the elasticity higher or lower
when the bond has a lower coupon rate?
c)The modified duration of the bond. Use it to estimate the...
Company A issues a bond with a $100,000 face value. The bond matures in three years....
Company A issues a bond with a $100,000 face value. The bond
matures in three years. The stated interest rate is 9% and the
market interest rate is 12%. Interest payments are made every 6
months.
Record the journal entry for the issuance of the
bond.
1. A 9% semiannual coupon bond matures in 4 years. The bond has a face value...
1. A 9% semiannual coupon bond matures in 4 years. The bond has
a face value of $1,000 and a current yield of 8.9704%.
a) What is the bond's price? Do not round intermediate
calculations. Round your answer to the nearest cent.
2. What is the bond's YTM? Do not round intermediate
calculations. Round your answers to two decimal
places.
A bond with a face value of $1,000 matures in 9 years and has a 7%...
A bond with a face value of $1,000 matures in 9 years and has a
7% semiannual coupon. The bond currently is traded at $920. Which
of the following statements is CORRECT?
A bond with a face value of $1,000 matures in 12 years and has a 9...
A bond with a face value of $1,000 matures in 12 years and has a
9 percent semiannual coupon. The bond has a nominal yield to
maturity of 6.85%, and it can be called in 4 years at a call price
of $1,045. Assume equilibrium, which of the following statement is
correct? (hint: what kind of bond is this?)
Select one:
a. The bond is currently traded at a discount.
b. The expected current yield will decrease.
c. All else...
A 7% semiannual coupon bond matures in 6 years. The bond has a face value of...
A 7% semiannual coupon bond matures in 6 years. The bond has a
face value of $1,000 and a current yield of 7.5649%.
What is the bond's price? Do not round intermediate calculations.
Round your answer to the nearest cent.
$______
What is the bond's YTM? (Hint: Refer to Footnote 6 for the
definition of the current yield and to Table 7.1) Do not round
intermediate calculations. Round your answers to two decimal
places.
______%
An 8% semiannual coupon bond matures in 4 years. The bond has a face value of...
An 8% semiannual coupon bond matures in 4 years. The bond has a
face value of $1,000 and a current yield of 8.3561%. What is the
bond's price? Do not round intermediate calculations. Round your
answer to the nearest cent. $ What is the bond's YTM? (Hint: Refer
to Footnote 6 for the definition of the current yield and to Table
7.1) Do not round intermediate calculations. Round your answers to
two decimal places. %
An 8% semiannual coupon bond matures in 6 years. The bond has a face value of...
An 8% semiannual coupon bond matures in 6 years. The bond has a
face value of $1,000 and a current yield of 8.4681%. What is the
bond's price? Do not round intermediate calculations. Round your
answer to the nearest cent. $ What is the bond's YTM? (Hint: Refer
to Footnote 7 for the definition of the current yield and to Table
7.1.) Do not round intermediate calculations. Round your answers to
two decimal places.
A 7% semiannual coupon bond matures in 5 years. The bond has a face value of...
A 7% semiannual coupon bond matures in 5 years. The bond has a
face value of $1,000 and a current yield of 7.4658%. What are the
bond's price and YTM? (Hint: Refer to Footnote 6 for the definition
of the current yield and to Table 7.1) Do not round intermediate
calculations. Round your answer for the bond's price to the nearest
cent and for YTM to two decimal places.
Bond’s price: $
YTM: %
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Consider the following nuclides: &
- In general, teams can be described three ways. Name and define each.
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
- Topic - Construction: Structural, loads, tension 1.) Explain why pure tension members are the most efficient...
- Procter and Gamble (PG) paid an annual dividend of $ 1.62$1.62 in 2009. You expect PG...
- locate a recent case of online child pornography. Write a summary of the incident and describe...
- #Python 5. Write function called evaluate() that evaluates the following Python expressions or assignments as specified:...
ADVERTISEMENT