(Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value. It matures in 30 years. The market's required yield to maturity on a comparable-k 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 () increases to 12 percent or (4) decreases to 7 percent? c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 30 years Recompute your answers in parts and b e. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8 percent? $ 887 42 (Round to the nearest cent) b.) What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 12 percent? (Round to the nearest cent)

(Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value. It matures in 30 years. The market's required yield to maturity on a comparable-k 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 () increases to 12 percent or (4) decreases to 7 percent? c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 30 years Recompute your answers in parts and b e. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8 percent? $ 887 42 (Round to the nearest cent) b.) What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 12 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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