Question
In: Finance
Assume a $1,000 face value bond has a coupon rate of 7.6 percent paid semiannually and...
Assume a $1,000 face value bond has a coupon rate of 7.6 percent paid semiannually and has an eight-year life.
If investors are willing to accept a 10.9 percent rate of return on bonds of similar quality, what is the present value or worth of this bond? (Round factor value calculations to 5 decimal places, e.g. 0.52755. Round other intermediate calculations to 2 decimal places, e.g. 52.75. Round final answer to nearest dollar amount.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
a. A 9.5 percent coupon (paid semiannually) bond, with a $1,000 face value and 20 years...
a.
A 9.5 percent coupon (paid semiannually) bond, with a $1,000
face value and 20 years remaining to maturity. The bond is selling
at $960. (Do not round intermediate calculations. Round
your answer to 3 decimal places. (e.g., 32.161))
Yield to
maturity___________
% per
year
b.
An 10 percent coupon (paid quarterly) bond, with a $1,000 face
value and 10 years remaining to maturity. The bond is selling at
$902. (Do not round intermediate calculations. Round your
answer to 3...
The $1,000 face value Orient bond has a coupon rate of 9%, with interest paid semiannually,...
The $1,000 face value Orient bond has a coupon rate of 9%, with
interest paid semiannually, and matures in 9 years. The bond
current price is $856. The bond can be called in 3 years. The call
premium on the bond is 7% of par. a) What is the bond's
yield to maturity (YTM)? b) What is the bond’s yield to call (YTC)?
c) Would an investor be more likely to earn the YTM or the YTC?
Explain
1. A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15...
1. A $1,000 face value corporate bond with a 6.5 percent
coupon (paid semiannually) has 15 years left to maturity. It has
had a credit rating of BBB and a yield to maturity of 7.2 percent.
The firm has recently gotten into some trouble and the rating
agency is downgrading the bonds to BB. The new appropriate discount
rate will be 8.5 percent. What will be the change in the bond's
price in dollars and percentage terms? (LG 6-2)
17....
A bond you are evaluating has a 7 percent coupon rate (compounded semiannually), a $1,000 face...
A bond you are evaluating has a 7 percent coupon rate
(compounded semiannually), a $1,000 face value, and is 10 years
from maturity. (LG 3-4) a. If the required rate of return on the
bond is 6 percent, what is its fair present value? b. If the
required rate of return on the bond is 8 percent, what is its fair
present value? c. What do your answers to parts (a) and (b) say
about the relation between required rates...
A bond you are evaluating has a 6.5 percent coupon rate (compounded semiannually), a $1,000 face...
A
bond you are evaluating has a 6.5 percent coupon rate (compounded
semiannually), a $1,000 face value, and is 10 years from maturity.
(LG 3-4)
a. If the required rate of return on the bond is 6 percent,
what is its fair present value?
b. If the required rate of return on the bond is 8 percent,
what is its fair present value?
c. What do your answers to parts (a) and (b) say about the
relation between required rates...
A $1,000 par value bond has an 8% coupon rate (paid semiannually). It has 5 years...
A $1,000 par value bond has an 8% coupon rate (paid
semiannually). It has 5 years remaining to maturity. If bond’s
current price $1,085.30, what should be the YTM of this bond?
a. 6%
b. 3.69%
c. 7.37%
d. 3%
A $1,000 par value bond has an 8% coupon rate (paid semiannually). It has 5 years...
A $1,000 par value bond has an 8% coupon rate (paid
semiannually). It has 5 years remaining to maturity. If current
market interest rate is 6%, what should be the current price of
this bond?
a. $1,000
b. $1,268.40
c. $918.89
d. $1,085.30
A $1,300 face value corporate bond with a 6.8 percent coupon (paid semiannually) has 15 years...
A $1,300 face value corporate bond with a 6.8 percent coupon
(paid semiannually) has 15 years left to maturity. It has had a
credit rating of BBB and a yield to maturity of 7.5 percent. The
firm has recently gotten into some trouble and the rating agency is
downgrading the bonds to BB. The new appropriate discount rate will
be 8.8 percent. What will be the change in the bond’s price in
dollars and percentage terms?
A $1,400 face value corporate bond with a 6.9 percent coupon (paid semiannually) has 13 years...
A $1,400 face value corporate bond with a 6.9 percent coupon
(paid semiannually) has 13 years left to maturity. It has had a
credit rating of BBB and a yield to maturity of 7.6 percent. The
firm has recently gotten into some trouble and the rating agency is
downgrading the bonds to BB. The new appropriate discount rate will
be 8.9 percent. What will be the change in the bond’s price in
dollars and percentage terms? (Negative values should be...
A $1,300 face value corporate bond with a 7.10 percent coupon (paid semiannually) has 15 years...
A $1,300 face value corporate bond with a 7.10 percent coupon
(paid semiannually) has 15 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 8.5 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 7.4 percent. What will be the change in the bond’s price in
dollars and percentage terms? (Round your answers to 3...
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