Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- LotsaDough's bonds have a 20-year maturity, 8% coupon (paid annually), $1000 par (face) value, and are priced at $952.68. What is LotsaDough's cost of debt (ignoring taxes)? Group of answer choices 7.0% 7.5% 8.0% 8.5%arrow_forwardYield to Maturity and Call with Semiannual Payments Thatcher Corporation's bonds will mature in 18 years. The bonds have a face value of $1,000 and an 8.5% coupon rate, paid semiannually. The price of the bonds is $950. The bonds are callable in 5 years at a call price of $1,050. What is their yield to maturity? What is their yield to call? Do not round intermediate calculations. Round your answers to two decimal places.arrow_forwardWhat will be the cost of a bond issue after tax by the company XYZ SA, if the country has a tax rate of 20%, a nominal value of US $ 2,500.00, market value of 99.50%, interest rate of 10.50%, financial expenses for placement of 0.75% and it is a 10-year issue:arrow_forward
- Cost of debtarrow_forwardView Policies Current Attempt in Progress Carla Vista, Inc., has four-year bonds outstanding that pay a coupon rate of 7.0 percent and make coupon payments semiannually. If these bonds are currently selling at $921.69. What is the yield to maturity that an investor can expect to earn on these bonds? Assume face value is $1,000. (Round answer to 1 decimal place, e.g. 15.2%) Yield to maturity % What is the effective annual yield? (Round answer to 1 decimal place, eg. 15.2%) Effective annual yield. %arrow_forwarda. An 8 ½%, 25-year, $1,000 bond is presently selling at a yield-to-maturity (YTM) of 9 4%. Assuming annual interest payments, what should you pay for the bond? b. What should you pay if interest is paid semiannually? c. Instead of a 25-year bond, they decide to issue 15-year bonds with annual payments. What should you pay for this bond if the YTM is 9 4%? Explain the differences in prices changes for (3a) and (3c) in terms of maturity. d. You buy an 8%, 15-year, $1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond? A bond has a market price that exceeds its face value. What type of bond is this? Describe the relationship between the coupon rate and the YTM. е.arrow_forward
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