FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Fish Company bonds have a face value of $1,000 and are currently quoted at 98.4% of par. The bonds pay $60 annually. What is the current yield on these bonds? Question 4 options: 6.52% 6.10% 6.71% 7.20% 6.95%arrow_forwardProblem: A company has issued three bonds (Par Value S1,000) with the following data: What happends to the bond prices as each bond approaches the maturity date? (assume similar bonds with 15 year maturity sell for 10% coupon rate and that this rate stays const. over time) Market rate 10% 5-years ago 10-years ago 25 year bond Issue date Maturity Coupon rate Coupon Payment Today 15 year bond 10% 20 year bond 7% 13% 70 100 130 15 15 15 Positive Values Positive Values Positive Values 6. 8. 9. 10 11 12 13 14arrow_forwardWeismann Company issued 15-year bonds a year ago at a coupon rate of 12 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 8 percent, what is the current bond price? Multiple Choice $593.35 $1,227.37 $1,670.52 $1,333.26 $ 1,343.26arrow_forward
- Ofir just issued 9.2% 12-year bonds. Find the YTM if these bonds make semiannual payments and are currently selling for 104% of par value. Specify the answer as 'X.XX%' 10.30% 4.29% 8.59% 9.45% 7.73%arrow_forwardMCQ: Legacy Inc. recently issued bonds that mature in 10 years. They have a par value of $1,000 and annual coupon of 6%. The current market interest rate is 8.5%. Assume that the bonds can be recalled at end of year 5 at $1,250. What will be the price of bonds? Select one: a. 833.82 b. 1067.75 c. 1130.95 d. 835.97 e. 582.73arrow_forwardBasic bond valuation Complex Systems has an outstanding issue of $1,000 - par - value bonds with a9% coupon interest rate. The issue pays interest annually and has 14 years remaining to its maturity date. a. If bonds of similar risk are currently earning a rate of return of 8%, how much should the Complex Systems bond sell for today? b. Describe the two possible reasons why the rate on similar - risk bonds is below the coupon interest rate on the Complex Systems bond. c. If the required return is 9% instead, what would the current value of Complex Systems' bond be? Contrast this finding with your findings in part a and discuss.arrow_forward
- Quade, Inc. bonds have a 4% coupon rate with semiannual coupon payments and a $1,000 par value. The bonds have 11 years until maturity, and sell for $990. What is the current yield for Quade's bonds? OA. 4.32% OB. 2.02% OC. 6.95% OD. 3.45% O E. None of the above.arrow_forwardMaturity (years) Price 2.83% 5.79% The above table shows the price per $100-face value bond of several risk-free, zero-coupon bonds. What is the yield to maturity of the four-year, zero- coupon, risk-free bond shown? 2.85% 12.07% 1 $97.25 2.89% 3 2 $94.53 $91.83 5 4 $89.23 $87.53arrow_forwardThe yield to maturity for 25-year bonds is as follows for four different bond rating categories. AAA 10.20% A 10.40 888 10.80% 12,00 The bonds of Falter Corporation were rated as A and issued at par a few weeks ago. The bonds have just been downgraded to BBB. Determine the new price of the bonds, assuming a 25-year maturity and semiannual interest payments. Assume the par value of the bonds is $1,000. (Use a Financial calculator to arrive at the answers. Round the final answer to 2 decimal places.) Price of the bondsarrow_forward
- Schallheim Corporation’s outstanding bonds have a $1,000 par value, a 7 percent semiannual coupon, 16 years to maturity, and an 8.5 percent yield to maturity (YTM). What is the bond’s price? a. $870.11 b. $871.37 c. $1,000.00 d. $914.20 e. $455.00arrow_forwardPerry Inc.'s bonds currently sell for $1,070. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield? Select the correct answer. ○ a. 7.94% b. 9.54% ○ c. 8.74% ○ d. 8.34% O e. 9.14%arrow_forwardPlease show proper steps thanksarrow_forward
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