stable in the next few years. Calculate the return that an investor purchasing the bond today should expect to earn.A. 1.43%B. 3.45%C. 3.75%D. 3.84%
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- An issue of bonds with par of $1000 matures in 12 years and pays interest at 7% annually. The current quoted market price is $1200 and the investors required rate of return is 8%. (a) Calculate the bonds expected rate of return. (b) Should the investor purchase the bond? (Explain your answer.)Energetic Engines is trying to estimate its cost bonds that pay $20 interest every six months. Each bond, which has a $1,000 face value and matures in six years, is currently selling for $900. Estimate Energetic’s cost of retained earnings using the bond-plus-risk-premium approach.Three years ago, Petty Partners Inc. issued 15-year, $1,000 bonds that are currently priced at $911.37. If the prevailing rate of return on similar investments is 5%, what is the annual interest payment of Petty Partners bonds ? Please answer fast i give you upvote.
- The Virginia Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest each six months. Their price has remained stable since they were issued. i.e. they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of $1,000 and pay $40 in interest every six months. If both bonds have the same yield, how many new bonds must the company issue to raise $2,000,000 cash?A mortgage bond issued by Automation Engineering is for sale for $8,700. The bond has a face value of $10,000 with a coupon rate of 7% per year, payable quarterly. What rate of return will be realized if the purchaser holds the bond to maturity 8 years from now?A $1,000 face value bond issued by the Purdue Company currently pays total annual interest of $80 per year and has a 15-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 bond? b. How would your answer change is the bond makes semi-annual payments? c-How would your answer in (a) change if, one year from now, investors only required a 6 percent annual rate of return on bond investments similar in quality to the Purdue bond? d-Suppose the original bond can be purchased for $925. What is the bond’s yield to maturity?
- The Lex Corporation issued a new series of bonds on January 1, 2000. These bonds were sold at par, have a 12 percent coupon and mature in 30 years, on December 31, 2029. Coupon payments are made on June 30 and December 31. Assume that you purchased an outstanding Lex bond on March 1, 2023, when the going rate of interest was 15.5 percent. How large a check must you have written to complete the transaction?2)JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest each six months. Their price has remained stable since they were issued, that is, they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of $1,000, and pay $40 in interest every six months. If both bonds have the same Yield to Maturity, how many new bonds must JRJ issue to raise $2,000,000? (Hint find the YTM of first bond the find the value of 2nd bond) DO NOT USE MS EXCEL FOR SOLUTIONThe Emory Corporation issued an 8%, 25-year bond 15 years ago. At the time of issue it sold for its par (face) value of $1,000. Comparable bonds are yielding 10% today. What must Emory’s bond sell for in today’s market to yield 10% (YTM) to the buyer? Assume the bond pays interest annually. Also calculate the bond’s current yield. a) Suppose the bond was issued 20 years ago what price must it be sold for today and also calculate the bond’s current yield b) Assume the bond was issued 5 years ago what price must it be sold for today and also calculate the bond’s current yield
- Tony's Pizzeria plans to issue bonds with a par value of $1,000 and 10 years to maturity. These bonds will pay $45 interest every 6 months. Current market conditions are such that the bonds will be sold to net $937.79. What is the YTM of the issue that a broker would quote to an investor?Assume that Beach Inc. has an issue of 20-year $1,000 par value bonds that pay 7% interest, annually. Further assume that today's required rate of return on these bonds is 5%. How much would these bonds sell for today?Solve by Formula. Three years ago, ABC Company issued 10-year bonds that pay 5% semiannually. a. If the bond currently sells for $1,045, what is the yield to maturity (YTM) on this bond? b. If you are expecting that the interest rate will drop in the near future and you want to gain profit by speculating on a bond, will you buy or sell this bond? Why?
