Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 83 basis points (0.83%). Your firm's five-year debt has a coupon rate of 5.8 % with semi-annual coupons. You see that new five-year Treasury notes are being issued at par with a coupon rate of 2.3%. What should be the price of your outstanding five-year bonds per $100 face value. The price of the bond is $ (Round to the nearest cent.)

Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 83 basis points (0.83%). Your firm's five-year debt has a coupon rate of 5.8 % with semi-annual coupons. You see that new five-year Treasury notes are being issued at par with a coupon rate of 2.3%. What should be the price of your outstanding five-year bonds per $100 face value. The price of the bond is $ (Round to the nearest cent.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1. Create a similar graph to the one shown on page 239, Figure 7.3. Graph two bonds each, with a face value of $1000. Both bonds have a coupon rate of 12.4% paid SEMI - ANNUALLY. Bond L has a maturity of 20 years and Bond S has a maturity of one year. Compute the value of the bonds for annual interest rates of 2 - 20% at increments of 2%. In the box below, enter the value of the SEMI - ANNUAL coupon. Post the table of values you compute and the graph as your Post 3 in the discussion board.
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 89 basis points (0.89%). Your firm's five-year debt has a coupon rate of 6.2% with semi-annual coupons. You see that new five-year Treasury notes are being issued at par with a coupon rate of 1.8%. What should be the price of your outstanding five-year bonds per $100 face value. The price of the bond is $ (Round to the nearest cent.)
The required rate on this company's debt has now risen to 16 percent. The firm has a bond issue outstanding with 24 years to maturity and a coupon rate of 9.8 percent, with interest being paid semiannually. What is the current yield?
(Expected rate of return and current yield) Time Wamer has bonds that are selling for $664. The coupon interest rate on the bonds is 10.35 percent and they mature in 26 years. What is the yield to maturity on the bonds? What is the current yield? a. The yield to maturity on the bond is 15.59 %. (Round to two decimal places.)
A 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?
Brooks Inc.'s callable bonds are currently selling for $1,300. They pay a coupon rate of 10% annually, have 10 years to maturity, and a $1,000 par value. The earliest that the bonds can be called is 3 years from now for a call price of $1,200. What is the Yield to Cail?
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 89 basis points (0.89%). Your firm's five-year has semi-annual coupons and a coupon rate of 6%. You see that new five-year Government of Canada bonds are being issued with a YTM of 3%. What should the price of your outstanding five-year bonds be? Assume a par value of $100. The price of your outstanding five-year bonds should be $ (Round to the nearest cent.)
A twenty-year government bond with a face value of 120$ makes annual coupon payments of 1% and offers a yield of 8% annually compounded.Suppose that one year later the bond yields at 5%. Showing your calculations,a) What return has bondholders earned over the 12-month period? Instead, suppose now that one year later the bond yields at 5.5%.b) What return has bondholders earned over the 12-month period?
consider a 30 - year U.S. corporate bond with a 10% coupon rate. The current interest rate is 7 percent. Find the holding period return, if the interest rate rises by 10 basis points after one period.
Arnot International's bonds have a current market price of $1,200. The bonds have a 12% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? Round your answer to two decimal places. % What is the yield to call if they are called in 5 years? Round your answer to two decimal places. % Which yield might investors expect to earn on these bonds, and why? I. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC.II. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM.III. Investors would expect the bonds to be called and to earn the YTC because the YTM is less than the YTC.IV. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. The bond's indenture indicates that the call provision gives…
Suppose the coupon rate is 10% issue at par $1000 and for 15 years. Let say the market interest rate decreased to 5% after the bond was issued a) What is the interest payment for this bond annually b) What is the interest payment on semi-annually c) How much should the investors pay for this bondi.e. the value
A firm's bond has a maturity of 10 years with a $1,000 face value, have a 8% coupon rate paid semi-annually. The bonds are callable in 5 years at $1,050. They currently sell at a price of $1,100. What is Yield to maturity?

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