Suppose that five years ago a corporation issued a 9-year bond with a coupon rate of 6.50% and the indenture specifies a make-whole call premium of 75 basis points over the yield on a comparable Treasury at the time the call provision is exercised. Assume the call is exercised immediately after the payment of a coupon. At the time the issue is called, the yield on a comparable Treasury is 4.05%. What is the current make-whole call price per $100 of par value?

Suppose a company issued two bonds, that have the same degree of default risk andmature in 20 years. Both bonds are callable at $1,100. The first bond has a par valueof $1,000, a coupon rate of 5%, makes annual coupon payments, and currently sellsfor $620. The second one also has a par value of $1,000, pays coupon rate of 7.5%annually, and its market price is $1,000.i) Calculate the yield to maturity of both bonds. All else being equal, explain whichbond the issuing company and the investors in bonds would find more attractive.Show your calculations

You need to know the yield to maturity on your company’s debt. The quoted bond price is 103.425, the stated coupon rate is 5.68% and coupons are paid semiannually. The bond matures in 10 years. Calculate the yield to maturity. a. 2.62 percent b. 5.24 percent c. 58.02 percent d. 29.01 percent

Compute the Macaulay duration under the following conditions:   a. A bond with a four-year term to maturity, a 10% coupon (annual payments), and a market yield of 8%. Do not round intermediate calculations. Round your answer to two decimal places. Assume $1,000 par value.   _________ years   b. A bond with a four-year term to maturity, a 10% coupon (annual payments), and a market yield of 12%. Do not round intermediate calculations. Round your answer to two decimal places. Assume $1,000 par value.   _________ years   c. Compare your answers to Parts a and b, and discuss the implications of this for classical immunization.   As a market yield increases, the Macaulay duration -(Select:declines/increases) . If the duration of the portfolio from Part a is equal to the desired investment horizon the portfolio from Part b is -(Select: no longer/still) perfectly immunized.        Only typed answer

Preston Corporation has a bond outstanding with an annual interest payment of $80, a market price of $1,270, and a maturity date in 9 years. Assume the par value of the bond is $1,000. Find the following: Coupon rate Current rate Approximate yield to maturity Exact yeild to maturity

Assume that the real, risk-free rate of interest is expected to be constant over time at 3 percent, and that the annual yield on a 6-year corporate bond is 8.00 percent, while the annual yield on a 10-year corporate bond is 7.75 percent: you may assume that the default risk and liquidity premium are the same for both bonds. Also assume that the maturity risk premium for all securities can be estimated as MRP, (0.1%) *(t-1), where t is the number of periods until maturity. Finally assume that inflation is expected to be constant at 3 percent for Years 1-6, and then constant at some rate for Years 7-10 (4 years). Given this information, determine what the market must anticipate the average annual rate of inflation will be for Years 7-10. 2.583% O 1979% 2.281% 1.375 % O 1.677 % 4

What is Temporary financing?

Suppose Home Depot issues 30-year bonds on which it pays a 4.00% (nominal) interest rate. Further, suppose that both Home Depot and the purchasers of its bonds anticipate inflation will average 2.00% during the life of the loan. Now suppose the inflation rate after the loan is made (i.e. after the bond is purchased) is actually 1.00% per annum. It follows that the actual real rate of interest is and, ceteris paribus, are (is) better off than anticipated as a result of the difference between the anticipated and the actual rate of inflation. Select one: a. 2.00%, Bondholders b. 2.00%, Home Depot O c. 3.00%, Bondholders d. 3.00%, Home Depot

keenan industries has a bond outstanding with 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's nominal yield to call? Can you provide a detail explanation....

A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is most correct? The bond's yield to maturity is greater than its coupon rate. If the yield to maturity stays constant until the bond matures, the bond's price will remain at $850. The bond's current yield is equal to the bond's coupon rate. The bond's yield to maturity is the same as capital gain yield. All of the statements above are correct. None of the above are correct