Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is89 basis points (0.89%). Your firm's five-year debt has a coupon rate of 6.2% with semi-annualcoupons. You see that new five-year Treasury notes are being issued at par with a coupon rate of1.8%. 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.)

Bond price will be the aggregate of present value of all coupon payments and present value of face…

Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt 89 basis points (0.89%). Your firm's five-year debt has a coupon rate of 6.2% with semi-annua coupons. You see that new five-year Treasury notes are being issued at par with a coupon rate 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.)

Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt 89 basis points (0.89%). Your firm's five-year debt has a coupon rate of 6.2% with semi-annua coupons. You see that new five-year Treasury notes are being issued at par with a coupon rate 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.)

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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A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9%. a) What is the interest payment you should receive each year? b) What is the selling price of the bond?
(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.)
Suppose two firms want to borrow money from a bank for a period of one year. Firm A has excellent credit, whereas Firm B’s credit standing is such that it would pay prime + 3 percent. The current prime rate is 6.55 percent, the 30-year Treasury bond yield is 4.30 percent, the three-month Treasury bill yield is 3.47 percent, and the 10-year Treasury note yield is 4.23 percent. Now suppose that Firm B decides to get a term loan for 10 years. What is the loan rate for the firm? Firm B's loan rate % How does this affect the company’s borrowing cost? Company's borrowing cost will (increase/ remain the same / decrease) .
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with three years to maturity has a coupon rate of 6%. The yield to maturity (YTM) of the bond is 9.90%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $567,545.29 $765,735.71 $900,865.54 $1,081,038.65 Based on your calculations and understanding of semiannual coupon bonds, complete the following statement: Assuming that interest rates remain constant, the T-note’s price is expected to ( Increase, Decrease).
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.)
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?
Choose the right letter 1. You are considering purchasing only one of the two bonds issued 24 Hours Corporation. Bond A and Bond B have a 7% coupon and 9% coupon, respectively; both are paid annually. The two bonds have a face value of Php 1,000 and will mature in 10 years. Assume that the yield to maturity of 8% for both bonds will remain unchanged over the next 10 years. Which of the following statements is most correct? A. Today, Bond B has a lower price than Bond A, but one year from now, the price of both bonds will be the same. B. Today, Bond B has a higher price than Bond A, but two years from now, the price of both bonds will be the same. C. Today, both bonds have the same price, and the price of each bond is expected to remain constant until the bonds mature. D. One year from now, the price of Bond A will be higher than its price today. E. The current yield of Bond A is greater than 8 percent. 2. Which of the following statements…
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with two years to maturity has a coupon rate of 4%. The yield to maturity (YTM) of the bond is 8.80%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $913,697.55 $1,096,437.06 $776,642.92 $575,629.46 Based on your calculations and understanding of se The T-note described in this problem is selling at a discount premium pupon bonds, complete the following statement:
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Toyota just issued ten-year bonds that make annual coupon payments of R50. Suppose you purchased one of these bonds at par value when it was issued. Right after your purchase, market interest rates jumped, and the YTM (interest rate) on your bond rose to six percent. What is the new price of you bond
James Cobin Co is a software development company that headquarters in Toronto and covers Canada, the United States, Japan, and Europe. The firm has issued bonds at face value at a yield to maturity at 6% a few years ago. Now with 10 years left until maturity, the yield to maturity has increased to 8%. a. Explain and interpret the change in the yield to maturity. b. What is the current price of the bond? Assume coupons are paid once a year. C Suppose that you purchased this bond today and are considenng selling it a year later. The yield to maturity is expected to be 10% a year later. Isit a good investment? Explain.
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with five years to maturity has a coupon rate of 6%. The yield to maturity (YTM) of the bond is 9.90%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $534,907.72 $849,059.88 $1,018,871.86 $721,700.90 Based on your calculations and understanding of semiannual coupon bonds, complete the following statement: The T-note described in this problem is selling at a .

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