Question

In: Economics

American multinational corporation that manufacturers semiconductors, issued a 5 percent coupon bond with a par value...

American multinational corporation that manufacturers semiconductors, issued a 5 percent coupon bond with a par value of $1,000 and a maturity date of 15 years. Five years have passed since the bond was originally issued and the bond is currently selling for $690. (***SHOW IN EXCEL***)

(a) What is the current yield?

(b) What is the yield to maturity?

(c) If five years from now the yield to maturity is 10 percent, what will be the price of the bond?

Solutions

Expert Solution

Formulas have been copied near cell where it is used for better understanding.

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

A 10 percent coupon bond was issued 2 years ago and sold at par value. Now,...
A 10 percent coupon bond was issued 2 years ago and sold at par value. Now, the required return on the same bond is 8 percent. What is the coupon rate today?
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate....
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,040. Further assume Ms. Bright paid 20 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...
A $1,000 par value bond was issued 30 years ago at a 12 percent coupon rate....
A $1,000 par value bond was issued 30 years ago at a 12 percent coupon rate. It currently has 25 years remaining to maturity. Interest rates on similar obligations are now 8 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,090. Further assume Ms. Bright paid 40 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...
Company issued 10-year, 11 percent coupon bond with a par value of $1,000. The bonds may...
Company issued 10-year, 11 percent coupon bond with a par value of $1,000. The bonds may be called in 5 years at a call price of $1,150. The bond currently sells for $1,350. You are required to answer the following questions: a) What is the bond's yield to maturity? b) What is the bond's current yield? c) What is the bond's capital gain or loss yield? d) What is the bond's yield to call? e) If you bought this bond...
Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semiannual coupon...
Boeing Corporation has just issued a callable (at par) three-year, 5% coupon bond with semiannual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $99. a. What is the bond’s yield to maturity? b. What is its yield to call? c. What is its yield to worst?
QUESTION 5: A $1,000 par value bond was issued 25 years ago at a 12 percent...
QUESTION 5: A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,050. Further assume Ms. Bright paid 30 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the...
An investor purchases a just-issued 30-year, 10.500% semiannual coupon bond at 108.235 percent of par value...
An investor purchases a just-issued 30-year, 10.500% semiannual coupon bond at 108.235 percent of par value and sells it after 15 years. The bond’s yield to maturity is 9.655% at time of sale, and falls to 9.100% immediately after the purchase but before the first coupon is received. All coupons are reinvested to maturity at the new yield to maturity. Does the investor realize a capital gain or loss on the sale, and by what amount expressed in % of...
An investor purchases a just-issued 30-year, 10.500% semiannual coupon bond at 108.235 percent of par value...
An investor purchases a just-issued 30-year, 10.500% semiannual coupon bond at 108.235 percent of par value and sells it after 15 years. The bond’s yield to maturity is 9.655% at time of sale, and falls to 9.100% immediately after the purchase but before the first coupon is received. All coupons are reinvested to maturity at the new yield to maturity. Does the investor realize a capital gain or loss on the sale, and by what amount expressed in % of...
A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in...
A company issued $1,000 par value bond at 6% coupon rate. The bond will mature in 6 years. Current market yield for this bond is 7%. If the coupon is paid semi-annually, what would be the value of this bond? Group of answer choices $951.68 $682.29 $973.36 $952.33
A 6 percent coupon bond that has a $1,000 par value, semiannual coupon payments and a...
A 6 percent coupon bond that has a $1,000 par value, semiannual coupon payments and a yield to maturity of 5.25 percent. The bond matures in 9 years. What is the price of the bond, What will happen to the price if market interest rates rise to 6.45 percent, what can you say about the relationship between the price of a bond and the market interest rate?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT