QUESTIONS 1-7 FSU Manufacturing has just issued a 15-year, 11% coupon interest rate. $1,000-par bond that pays interest annually. The required return is currently 16%, and the company is certain it will remain at 16% until the bond matures in 15 years. Assuming that the required return does remain at 16% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. NOTE: Use this information to answer questions 1 thru 7. Do not enter dollar or percent signs in your answers. Round off all of your numerical responses in questions 1 thru 7 to two (2) decimal points.

QUESTIONS 1-7 FSU Manufacturing has just issued a 15-year, 11% coupon interest rate. $1,000-par bond that pays interest annually. The required return is currently 16%, and the company is certain it will remain at 16% until the bond matures in 15 years. Assuming that the required return does remain at 16% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. NOTE: Use this information to answer questions 1 thru 7. Do not enter dollar or percent signs in your answers. Round off all of your numerical responses in questions 1 thru 7 to two (2) decimal points.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 9P: Bond Valuation and Interest Rate Risk The Garraty Company has two bond issues outstanding. Both...

See similar textbooks

Similar questions

Bond Valuation and Interest Rate Risk The Garraty Company has two bond issues outstanding. Both bonds pay 100 annual interest plus 1,000 at maturity. Bond L has a maturity of 15 years, and Bond S has a maturity of 1 year. a. What will be the value of each of these bonds when the going rate of interest is (1) 5%, (2) 8%, and (3) 12%? Assume that there is only one more interest payment to be made on Bond S. b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)?
Bond value and time—Constant required returns Pecos Manufacturing has just issued a 15-year, 8% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 12%, and the company is certain it will remain at 12% until the bond matures in 15 years. a. Assuming that the required return does remain at 12% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as time passes? Explain in light of the following graph:
Bond value and time—Constant required returns Pecos Manufacturing has just issued a 15-year, 14% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 13%, and the company is certain it will remain at 13% until the bond matures in 15 years. a. Assuming that the required return does remain at 13% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else remaining the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond value as time moves toward maturity?
Bond value and time—Constant required returns Pecos Manufacturing has just issued a 15-year, 15% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 13%, and the company is certain it will remain at 13% until the bond matures in 15 years. a. Assuming that the required return does remain at 13% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as time passes? a. (1) The value of the bond with 15 years to maturity is ($enter your response here) (Round to the nearest cent.)
Bond value and time—Constant required returns Pecos Manufacturing has just issued a 15-year, 15% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 13%, and the company is certain it will remain at 13% until the bond matures in 15 years. a. Assuming that the required return does remain at 13% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as time passes? Explain in light of the following graph: a. (1) The value of the bond with 15 years to maturity is $ (enter your response here) (Round to the nearest cent.)
Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15-year, 16% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 17%, and the company is certain it will remain at 17% until the bond matures in 15 years. a. Assuming that the required return does remain at 17% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else remaining the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond value as time moves toward maturity? Explain in light of the following graph: a. (1) The value of the bond with 15 years to maturity is $ (Round to the nearest cent.) C
Problem 4 Collingwood Homes has a bond issue outstanding that pays an 8.5 percent coupon and matures in 16.5 years. The bonds have a par value of $1,000 and a market price of $944.30. Interest is paid semiannually. What is the yield to maturity?
Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15-year, 9% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 17%, and the company is certain it will remain at 17% until the bond matures in 15 years. a. Assuming that the required return does remain at 17% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity b. All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as time passes? Explain in light of the following graph: a. (1) The value of the bond with 15 years to maturity is $ (Round to the nearest cent.)
Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 14%, and the company is certain it will remain at 14% until the bond matures in 15 years. a. Assuming that the required return does remain at 14% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else remaining the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond value as time moves toward maturity? Explain in light of the following graph: . a. (1) The value of the bond with 15 years to maturity is $ (Round to the nearest cent.) ...
Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 15%, and the company is certain it will remain at 15% until the bond matures in 15 years. a. Assuming that the required return does remain at 15% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. b. All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as time passes? Explain in light of the following graph: a. (1) The value of the bond with 15 years to maturity is $ (Round to the nearest cent.) Graph/chart Bond Value ($) 1,300- 1,200- 1,100- 1,000- 900- 800- 700- 600- 500+ 15 Years to Maturity - X
QUESTION 1 Kinetik Bhd issued bonds with 11 years remaining to maturity. Interest is paid semi-annually and the bond has a coupon rate of 9% and a par value of RM1,000. The bond sells for RM1,200. a. Calculate the yield to maturity. b. Calculate the current yield?
QUESTION 1 MaNga Inc. bonds have a current market price of $1,128.87 the bonds have an 9% annual coupon payment, a $1,000 face value, and 12 years left until maturity. The bonds may be called in 3 years at $1,125. What yield might investors expect to eam on these bonds? @7% 4.42% 7.16% 4.33%