FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have 9% annual coupon rate and were issued 1 year ago at their par value of $1000. However, due to changes in interest rates, the
What is the yield to maturity?
For the coming year, what are the expected current and
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Will the actual realized yields be equal to the expected yields if interest rates change? If not, how will they differ?
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Will the actual realized yields be equal to the expected yields if interest rates change? If not, how will they differ?
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- Company Z bonds have an $1000 par value and they mature in 30 years the nominal annual yield to maturity is 8.25% but they pay interest semi annually and their current price is $875. what is the bonds nominal coupon interest rate?arrow_forwardDynamic Systems has an outstanding bond that has a $1,000 par value and a 9 percent coupon rate. Interest is paid semiannually. The bond has 10 years remaining until it matures. Today the going interest rate is 12 percent, and it is expected to remain at this level for many years in the future. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. % Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forwardA major manufacturer is reevaluating its bonds since it is planning to issue a new bond in the current market. The firm's outstanding bond issue has 7 years remaining till maturity. The bonds were issued with an 8 percent coupon rate (paid quarterly) and selling at par value. The required rate of return is 10 percent. What is the current value of these securities?arrow_forward
- You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $1,044. These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. The bonds have a par value of $1,000. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total real return %arrow_forward(Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 8 percent. The interest is paid semiannually and the bonds mature in 8 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 15 percent, what is the value of the bond? What is its value if the interest is paid annually? a. The value of the Enterprise bonds if the interest is paid semiannually is $ (Round to the nearest cent.)arrow_forwardWoolworth has 10 per cent coupon bonds making annual payments with a YTM of 6.5 per cent. The bond has a par value of $1000 and the current yield on these bonds is 8.42 per cent. How many years do these bonds have left until they mature? [Please enter the exact value, do not rounding up]arrow_forward
- GrowthSec Ltd has raised $10M in debt funding by issuing 100 5 year bonds with a face value of $100,000 each. The bonds pay semi-annual coupons at 6% p.a. If the yield to maturity is 7% p.a., what will be the price of each bond? If after one year the bond is trading at a premium, what must have happened to market interest rates? Why has this impacted the bond price?arrow_forwardDynamic Systems has an outstanding bond that has a $1,000 par value and a 6 percent coupon rate. Interest is paid semiannually. The bond has 13 years remaining until it matures. Today the going interest rate is 8 percent, and it is expected to remain at this level for many years in the future. Compute the current yield. Do not round intermediate calculations. Round your answer to two decimal places. % Compute the capital gains yield that the bond will generate this year. Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forwardShow all your work. The bonds issued by XYZ CO. currently sell for $1,020. They have a 8-year maturity, an annual coupon of $75, and a par value of $1,000. What are their current yield and capital gains yield during the current year?arrow_forward
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