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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%.
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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
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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...
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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
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a) What is the bond's price? Do not round intermediate
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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%...
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correct? (hint: what kind of bond is this?)
Select one:
a. The bond is currently traded at a discount.
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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
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Round your answer to the nearest cent.
$______
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to Footnote 6 for the definition of the current yield and to Table
7.1) Do not round intermediate calculations. Round your answers to
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calculations. Round your answer for the bond's price to the nearest
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Bond’s price: $
YTM: %
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