Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years, are callable 5 years from today at $1,025. They sell at a price of $1,284.95, and the yield curve is flat. Assume that interest rates are expected to remain at their current level.

What is the best estimate of these bonds' remaining life?

It is now January 1, 2019, and you are considering the purchase of an outstanding bond that was issued on January 1, 2017. It has a 9.5% annual coupon and had a 30-year original maturity. (It matures on December 31, 2046.) There is 5 years of call protection (until December 31, 2021), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 116.57% of par, or $1,165.70.

What is the yield to maturity?
What is the yield to call?

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years, are callable 3 years from today at $1,050. They sell at a price of $1,218.85, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to two decimal places. 7.57 years If Lourdes plans to raise additional capital and wants to use debt...

Lourdes Corporation's 15% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years,...

Lourdes Corporation's 15% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years, are callable 4 years from today at $1,075. They sell at a price of $1,359.25, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to the nearest whole number. years If Lourdes plans to raise additional capital and wants to use debt...

EXPECTED INTEREST RATE Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature...

EXPECTED INTEREST RATE Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 20 years, are callable 4 years from today at $1,050. They sell at a price of $1,258.68, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to two decimal places. years If Lourdes plans to raise additional capital and wants to...

Lourdes Corporation's 11% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years,...

Lourdes Corporation's 11% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years, are callable 3 years from today at $1,050. They sell at a price of $1,162.46, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. What is the best estimate of these bonds' remaining life? Round your answer to two decimal places. years If Lourdes plans to raise additional capital and wants to use debt financing,...

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years.

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years. The bonds currently sell for $1,230.51 in the market. What is the bond Yield-to-Maturity (YTM) ?

Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years,...

Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from today at $1,050. They sell at a price of $1,353.54, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. b. If Lloyd plan to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

Question

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...

Solutions

Expert Solution

Related Solutions

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...

Lourdes Corporation's 15% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years,...

EXPECTED INTEREST RATE Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature...

Lourdes Corporation's 11% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 25 years,...

Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years.

Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years,...

Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 15 years to...

Nesmith Corporation's outstanding bonds have a $1,000 par value, a 8% semiannual coupon, 8 years to...

Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 18 years to...

Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 20 years to...