Bond valuation - Quarterly interest Calculate the value of a $5,000-par-value bond paying quarterly interest at an annual coupon interest rate of 9% and having 11 years until maturity if the required return on similar-risk bonds is currently a 14% annual rate. The present value of the bond is (Round to the nearest cent.)

Bond valuation - Quarterly interest Calculate the value of a $5,000-par-value bond paying quarterly interest at an annual coupon interest rate of 9% and having 11 years until maturity if the required return on similar-risk bonds is currently a 14% annual rate. The present value of the bond is (Round to the nearest cent.)

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 10P

See similar textbooks

Similar questions

Current Yield for Annual Payments Heath Food Corporations bonds have 7 years remaining to maturity. The bonds have a face value of 1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield?
Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond’s current yield?
Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments 800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments 2,000 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Required Assuming the market rate of interest is 10%, calculate the selling price for each bond issue.
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)?
K Bond valuation - Quarterly interest Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate of 11% and having 13 years until maturity if the required return on similar-risk bonds is currently a 15% annual rate The present value of the bond is $ 772.65 (Round to the nearest cent)
Bond valuation - Quarterly interest Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate of 12% and having 11 years until maturity if the required return on similar-risk bonds is currently a 16% annual rate.
Bond valuation-Semiannual interest Find the value of a bond maturing in 11 years, with a $1,000 par value and a coupon interest rate of 13% (6.5% paid semiannually) if the required return on similar-risk bonds is 17% annual interest (8.5% paid semiannually). The present value of the bond is $ (Round to the nearest cent.)
Bond valuation—Semiannual interest Find the value of a bond maturing in 5 years, with a $1,000 par value and a coupon interest rate of 11%(5.5% paid semiannually) if the required return on similar-risk bonds is 16% annual interest (8% paid semiannually). The present value of the bond is $________
Bond valuation-Semiannual interest Find the value of a bond maturing in 5 years, with a $1,000 par value and a coupon interest rate of 11% (5.5% paid semiannually) if the required return on similar-risk bonds is 18% annual interest. The present value of the bond is $ (Round to the nearest cent.) C