A one-year U.S. Treasury bond and a one-year corporation bond both promise to pay $11,934 next year. The corporation bond carries a risk premium of 15 percent over Treasury bond. The price of the Treasury bond today is $11,700. What is the price of the corporation bond? Price of the corporation bond = dollars.
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- Suppose a U.S. government bond pays $2,155.40 in 5 years at 6% interest. Calculate the present value of the bond.An investor gathers the following data on three newly-issued bonds: 1-year government bond, 3.0% yield 1-year ABC corporate bond, 4.2% yield 10-year government bond, 3.8% yield If investors require a 0.5% liquidity premium for corporate bonds, what are the components of the required return on a 10-year ABC bond?A $1,000 face value bond issued by the Purud Company currently pays total annual interest of $80 per year and has a 13-year life. a-What is the present value, or worth, of this bond if investors are willing to accept a 10 percent annual rate of return on bonds of similar quality if the bond is a Eurobond? b-How would your answer in (a) change if the bond is a U.S. bond? c-How would your answer in (b) change if, one year from now, investors only required a 6 percent annual rate of return on bond investments similar in quality to the Purud bond? d-Suppose the original bond can be purchased for $925. What is the bond's yield to maturity?
- A bond promises to pay $150 in one year. What is the interests rate on the bond if its price today is $65,$75 and $85?The Saleemi Corporation's $1,000 bonds pay 12 percent interest annually and have 12 years until maturity. You can purchase the bond for $955. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 11 percent?the Saleemi Corporation's $1,000 bonds pay 11 percent interest annually and have 12 years until maturity. You can purchase the bond for $895. a. what is the yield to maturity on this bond? b. should you purchase the bond if the yield to maturity on a comparable - risk bond is 14 percent?
- Treasury notes and bonds. Use the information in the following table: . Assume a $100,000 par value. What is the yield to maturity of the August 2000 Treasury bond with semiannual payment? Compare the yield to maturity and the current yield . How do you explain this relationship? What is the yield to maturity of the August 2000 Treasury bond?A corporate bond matures in five years. This bond’s credit spread over comparable maturity Treasury Bonds is 3.25%. Treasury bond yields are currently 2.125%, 4.375%, and 6.250% for 2-year, 5-year, 10-year maturity bonds, respectively. What is the cost of debt for the firm which issued the bond?(Bond valuation relationships) Stanley, Inc. issues 10-year $1,000 bonds that pay $85 annually. The market price for the bonds is $1,034. The market's required yield to maturity on a comparable-risk bond is 8 percent. a. What is the value of the bond to you? b. What happens to the value if the market's required yield to maturity on a comparable-risk bond (i) increases to 12 percent or (ii) decreases to 6 percent? c. Under which of the circumstances in part b should you purchase the bond? Question content area bottom Part 1 a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8 percent? $enter your response here (Round to the nearest cent.)
- (Bond valuation relationships) Stanley, Inc. issues 15-year $1,000 bonds that pay $90 annually. The market price for the bonds is $1,182. The market's required yield to maturity on a comparable-risk bond is 7 percent. a. What is the value of the bond to you? b. What happens to the value if the market's required yield to maturity on a comparable-risk bond (i) increases to 11 percent or (ii) decreases to 5 percent? c. Under which of the circumstances in part b should you purchase the bond? a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 7 percent? (Round to the nearest cent.) $Consider the following three bond quotes: a Treasury note quoted at 95.84, a corporate bond quoted at 102.85, and a municipal bond quoted at 101.50. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5, 000, what are the prices of these three bonds in dollars?Fingen's 11-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is $1,110 and the market's required yield to maturity on a comparable-risk bond is 8 percent. a. Compute the bond's yield to maturity. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond?