(Bond valuation relationships) A bond of Telink Corporation pays $100 in annual interest, with a $1,000 par value. The bonds mature in30 years. The market's required yield to maturity on a comparable-risk bond is 8 percent.a. Calculate the value of the bond.b. How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 14 percent or (ii)decreases to 6 percent?c. Interpret your findings in parts a and b.a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8 percent?$(Round to the nearest cent.)b. (i) What is the value of the bond if the market's required yield to maturity on a comparable risk bond increases to 14 percent?(Round to the nearest cent.)b. (ii) What is the value of the bond if the market's required yield to maturity on a comparable risk bond decreases to 6 percent?(Round to the nearest cent.)c. The change in the value of a bond caused by changing interest rates is called interest-rate risk. Based on the answers in part b, a; by contrast, an increase in interest ratesdecrease in interest rates (the yield to maturity) will cause the value of a bond towill cause the value to(Select from the drop-down menus.)Also, based on the answers in part b, if the yield to maturity (current interest rate):equals the coupon interest rate, the bond will sell atexceeds the bond's coupon rate, the bond will sell at; andEnter your answer in each of the answer boxes.

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(Bond valuation relationships) A bond of Telink Corporation pays $100 in annual interest, with a $1,000 par value. The bonds mature in 30 years. The market's required yield to maturity on a comparable-risk bond is 8 percent. a. Calculate the value of the bond. b. How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 14 percent or (ii) decreases to 6 percent? c. Interpret your findings in parts a and b. a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8 percent? (Round to the nearest cent.) b. (i) What is the value of the bond if the market's required yield to maturity on a comparable risk bond increases to 14 percent? (Round to the nearest cent.) b. (i) What is the value of the bond if the market's required yield to maturity on a comparable risk bond decreases to 6 percent? (Round to the nearest cent.)

(Bond valuation relationships) A bond of Telink Corporation pays $100 in annual interest, with a $1,000 par value. The bonds mature in 30 years. The market's required yield to maturity on a comparable-risk bond is 8 percent. a. Calculate the value of the bond. b. How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 14 percent or (ii) decreases to 6 percent? c. Interpret your findings in parts a and b. a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8 percent? (Round to the nearest cent.) b. (i) What is the value of the bond if the market's required yield to maturity on a comparable risk bond increases to 14 percent? (Round to the nearest cent.) b. (i) What is the value of the bond if the market's required yield to maturity on a comparable risk bond decreases to 6 percent? (Round to the nearest cent.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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