Examine the following bonds A) Corporate Bond - maturity 15.08.2025 - fixed coupon rate - semiannual payment - rating BB B) Reverse convertible bond- maturity 15.08.2025 - fixed coupon rate- semiannual payment- rating BB C) Equity linked bond - maturity 15.08.2025- fixed coupon rate - semiannual payment - rating B D) Convertible Bond maturity 15.08.2025 fixed coupon rate - semiannual payment - rating BB Which bond has the highest price, at the issue? Why? Explain also the difference between bond C and D regarding the price

Examine the following bonds A) Corporate Bond - maturity 15.08.2025 - fixed coupon rate - semiannual payment - rating BB B) Reverse convertible bond- maturity 15.08.2025 - fixed coupon rate- semiannual payment- rating BB C) Equity linked bond - maturity 15.08.2025- fixed coupon rate - semiannual payment - rating B D) Convertible Bond maturity 15.08.2025 fixed coupon rate - semiannual payment - rating BB Which bond has the highest price, at the issue? Why? Explain also the difference between bond C and D regarding the price

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 3R

See similar textbooks

Similar questions

When the bond reaches its ______ the company repays the / its _______ maturity date; creditor payment due: interest amortization due: coupon rate all of the choices maturity date investor
From page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.
( Fixed Income Securities) 18) F) Define the curvature of the term structure with respect to short-term, medium-term and long-term bonds and hence calculate the curvatures of the term structure at time t and time t+1 using the table below Term structure of interest rates Maturity Time t Time t+1 Short-term 3% 2% Medium-term 4% 5% Long-term 5% 4%
Calculating the risk premium on bonds The text presents a formula where (1+1) = (1-p)(1 +i+x) + p(0) where i is the nominal interest rate on a riskless bond x is the risk premium p is the probability of default (bankruptcy) If the probability of bankruptcy is zero, the rate of interest on the risky bond is When the nominal interest rate for a risky borrower is 8% and the nominal policy rate of interest is 3%, the probability of bankruptcy is %. (Round your response to two decimal places.) When the probability of bankruptcy is 6% and the nominal policy rate of interest is 4%, the nominal interest rate for a risky borrower is %. (Round your response to two decimal places.) When the probability of bankruptcy is 11% and the nominal policy rate of interest is 4%, the nominal interest rate for a risky borrower is %. (Round your response to two decimal places.) The formula assumes that payment upon default is zero. In fact, it is often positive. How would you change the formula in this case?…
The coupon rate of a bond is typically __________.a. fixed at the time of bond issuanceb.subject to change based on the federal funds ratec.zero in the case of zero - coupon bondsd. Both A and C
PROBLEM: 1. Match the following bond classifications with the appropriate characteristic by entering the appropriate letter in the space provided. Zero-coupon bonds f. Callable bonds а. Debenture bonds е. Mortgage bonds Registered bonds d. b. с. Convertible bonds g. h. Coupon bonds Serial bonds 1. Portions of the bond mature in periodic installments. 2. Unregistered bonds. 3. Bonds that are secured by a lien against specific assets. 4. Bonds that can be exchanged for a predetermined number of shares of stock. 5. Bonds whose marketability is based on the general credit rating of the issuing company. 6. Bonds whose interest is paid to the individuals listed in the corporate records as owners of the bonds. 7. Bonds that the company has the right to retire before their maturity date. 8. Bonds on which no interest is paid until the maturity date.
Comment on the attractiveness of the bonds in two ways: a) How does the yield compare to the benchmark? Market YTM: 3.62% YTM of bond: 3.72% b) How does the current price compare to the benchmark-yield implied price? Price: 100.875 Implied price: 100.923
Zero coupon bonds are an example of ___________. a. convertible bonds b. extendible notes c. original issue deep discount bonds d. floating rate notes
Which of the following would be included in the journal entry to show the conversion of bonds payable with additional consideration (a 'sweetener ' to encourage bondholders to sell their bond back )? (NIE 13) A debit to conversion expense debit to common stock A debit to cash A debit to bond discount
Nominal interest rate of a corporate bond includes all of the following components EXCEPT _____. Group of answer choices a. real risk-free interest rate b. expected inflation c. unexpected inflation d. credit risk premium
QUESTION EIGHTa) What is the relationship between the price of a bond and its YTM? b) Explain why some bonds sell at a premium over par value while other bonds sell at a discount.What do you know about the relationship between the coupon rate and the YTM for premiumbonds? What about for discount bonds? For bonds selling at par value? c) What is the relationship between the current yield and YTM for premium bonds? For discountbonds? For bonds selling at par value? SEBO PLC just paid a dividend of K2.75 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on SEBO stock is 13 percent, what will a share of stock sell for today?
Define each of the following terms:c. Floating-rate bond; zero coupon bond; original issue discountbond (OID)