A $1,000 par value 8-year bond with a 13 percent coupon rate recently sold for $980....

A $1,000 par value 8-year bond with a 13 percent coupon rate recently sold for $980. What is the yield to maturity if the bond makes semiannual payments? Submit your answer as a percentage rounded to two decimal places.
1. Describe and interpret the assumptions related to the problem.
2. Apply the appropriate mathematical model to solve the problem.
3. Calculate the correct solution to the problem.

Consider a 7 year bond with face value $1,000 that pays an 8.4% coupon semi-annually and has a yield-to-maturity of 6.9%. What is the approximate percentage change in the price of bond if interest rates in the economy are expected to increase by 0.40% per year? Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?)
1. Describe and interpret the assumptions related to the problem.
2. Apply the appropriate mathematical model to solve the problem.
3. Calculate the correct solution to the problem.

ABC, Inc. expects its current annual $30 per share common stock dividend to remain the same for the foreseeable future. What is the intrinsic value of the stock to an investor with a required return of 9.2%? Round to two decimal places.
1. Describe and interpret the assumptions related to the problem.
2. Apply the appropriate mathematical model to solve the problem.
3. Calculate the correct solution to the problem.

Expert Solution

jeff jeffy answered 2 years ago

A $1,000 par value 14-year bond with a 10 percent coupon rate recently sold for $965....

A $1,000 par value 14-year bond with a 10 percent coupon rate recently sold for $965. The yield to maturity is A. 10.49%. B. 10.00%. C. 8.87%. D. 6.50%.

A $1,000 par value 12-year bond with a 14 percent coupon rate recently sold for $925....

A $1,000 par value 12-year bond with a 14 percent coupon rate recently sold for $925. What is the yield to maturity? Assume semiannual payments and submit your answer as a percentage rounded to two decimal places. To answer the question: (1) Describe and interpret the assumptions related to the problem. (2) Apply the appropriate mathematical model to solve the problem. (3) Calculate the correct solution to the problem.

Consider a bond (with par value = $1,000) paying a coupon rate of 8% per year...

Consider a bond (with par value = $1,000) paying a coupon rate of 8% per year semiannually when the market interest rate is only 5% per half-year. The bond has three years until maturity. a. Find the bond's price today and six months from now after the next coupon is paid. (Round your answers to 2 decimal places.) Current price Price after 6 months b. What is the total (six-month) rate of return on the bond? (Do not round intermediate...

You purchased a bond with a par value of $1,000 and a coupon rate of 8...

You purchased a bond with a par value of $1,000 and a coupon rate of 8 percent at a price of $1,100 at the beginning of the year. The price of the bond was $1,000 at the end of the year. Which of the following development(s) could explain this change? 1. The default risk of the bond increased. 2. The YTM of bonds of similar credit risk increased. 3. The YTM of bonds of similar credit risk decreased. 4. The...

Consider a bond with a par value of $1,000, a coupon rate of 8%, and 10...

Consider a bond with a par value of $1,000, a coupon rate of 8%, and 10 years until maturity. What is the most you should pay for this asset if your required rate of return for assets like this is 5% and the coupon payments are paid annually? How does your answer change if the bond is semi-annual? Does the semi-annual bond sell at a premium or a discount?

8. What is the YTM of a $1,000 par value bond with a 10% coupon rate,...

8. What is the YTM of a $1,000 par value bond with a 10% coupon rate, semi-annual coupon payments, and 9 years to maturity if the bond currently sells for $900? Round to the nearest hundredth percent. Do not include a percent sign in your answer. (i.e. If your answer is 4.32%, then type 4.32 without a % sign) 9. Ford Motors’ bond is currently traded at the value of $1,208.70 and a yield of 4.22%. The current rating of...

Bond valuation You are considering a 15-year, $1,000 par value bond. Its coupon rate is 8%,...

Bond valuation You are considering a 15-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 11.06%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent. $

You are considering a 30-year, $1,000 par value bond. Its coupon rate is 8%, and interest...

You are considering a 30-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 9.4835%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.

You are considering a 15-year, $1,000 par value bond. Its coupon rate is 8%, and interest...

You are considering a 15-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 7.9945%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent. $

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest...

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. The data has been collected in the Microsoft Excel Online file below. If you require an "effective" annual interest rate (not a nominal rate) of 10.16%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

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