A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?
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- A firm issues two-year bonds with a coupon rate of 6.9%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.2%. What should the price of the firm's outstanding two-year bonds be per $100 of face value? OA. $84.42 OB. $105.52 OC. $126.63 OD. $147.73 Res Printed Date:A firm issues 2-year bonds with a coupon rate of 4.9%, paid semiannually. The credit spread for this firm's 2-year debt is 1.2%. New 2-year Treasury notes are being issued at par with a coupon rate of 5.2%. What should the price of the firm's outstanding 2-year bonds be if their face value is $1000? A. $4.80 B. $972.25 C. $777.80 D.A firm issues five-year bonds with a coupon rate of 6.4%, paid semiannually. The credit spread for this firm's five-year debt is 0.8%. New five-year Treasury notes are being issued at par with a coupon rate of 3.3%. What should the price of the firm's outstanding five-year bonds be per $100 of face value? A. $88.24 B. $132.36 O C. $154.42 O D. $110.30
- A firm issues ten-year bonds with a coupon rate of 6%, paid semiannually. The credit spread for this firm's ten-year debt is 0.8%. New ten-year Treasury notes are being issued at par with a coupon rate of 3.4%. What should the price of the firm's outstanding ten-year bonds be per $100 of face value? OA. $91.66 OB. $114.58 OC. $137.49 OD. $160.41 UCCEEA 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.Thatcher Corporation’s bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8 percent coupon rate, paid semiannually. The price of the bond is $1,100. What is the firm’s cost (percentage rate) of borrowing money under these market conditions?
- A company releases a five-year bond with a face value of $1,000 and coupons paid semiannually. If market interest rates imply a YTM of 4%, what should be the coupon rate offered if the bond is to trade at par?Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 10%. The firm then enters into an interest rate swap where it pays SOFR and receives a fixed 5.2% on notional principal of $100 million. What is the firm's effective interest rate on its borrowing? Note: Enter value as positive amount. Round your answer to 1 decimal place. Effective interest rate %A firm issues 10-year bonds with a coupon rate of 4.5%, paid semiannually. The credit spread for this firm's 10-year debt is 1.2 %. New 10-year Treasury notes are being issued at par with a coupon rate of 5.3%. What should the price of the firm's outstanding 10-year bonds be if their face value is $1000? OA. $854.61 OB. $683.69 OC. $24.00 OD. $1,196.45
- American Industries' outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $850. What is the bond's nominal coupon interest rate? Briefly discuss nominal coupon.1. A bank quotes an interest rate of 14% per annum with quarterly compounding. What is the equivalent rate with (a) continuous compounding and (b) annual compounding? 2. What is meant by LIBOR and LIBID. Which is higher? 3. The 6-month and 1-year zero rates are both 10% per annum. For a bond that has a life of18 months and pays a coupon of 8% per annum (with semiannual payments and onehaving just been made), the yield is 10.4% per annum. What is the bond’s price? What isthe 18-month zero rate? All rates are quoted with semiannual compounding. 4. An investor receives $1,100 in one year in return for an investment of $1,000 now.Calculate the percentage return per annum with:(a) Annual compounding(b) Semiannual compoundingInterest Rates 97(c) Monthly compounding(d) Continuous compounding.5. Suppose that 6-month, 12-month, 18-month, 24-month, and 30-month zero rates are,respectively, 4%, 4.2%, 4.4%, 4.6%, and 4.8% per annum, with continuous compounding.Estimate the cash price of a bond…A) A bank invests $15 million in a coupon bond. The coupon bond pays a coupon of 4% per year, paid semi-annually and has 2 years to maturity. If the current yield-to-maturity is 3.5% semi-annually, what is the price of the bond? B) Recalculate the price of the bond if, a year later, the yield-to-maturity surged by 300 basis points C) What is the holding period return recorded on the bond position over the past year?