Homework 4_Bank Management

Y8 Here are data on $1,000 par value bonds issued by Caterpillar and Intel. Assume you are thinking about buying these bonds. CaterpillarIntelCoupon5%4%Years to Maturity810Required Return4%5% Answer the following questions: a)     Assuming interest is paid annually, calculate the values of each of the bonds b)     How would these values change if the coupon was paid semiannually ( c)     Assume that the bonds with the coupon that is paid annually (point a) are selling for the following amounts: ·       Caterpillar $1,050 ·       Intel $980 What are the expected rates of return (YTM) for each bond? d)     How would change the price of each bond if the required rate of return (current 4% for Caterpillar and 5% for the Intel and with annual coupon) increased by 2%  What will you deduce about the relationship between market interest rate and bond prices? .

(Related to Checkpoint​ 9.4)  ​(Bond valuation) A bond that matures in 8 years has a ​$1,000 par value. The annual coupon interest rate is 13 percent and the​ market's required yield to maturity on a​ comparable-risk bond is 16 percent. What would be the value of this bond if it paid interest​ annually? What would be the value of this bond if it paid interest​ semiannually?       Question content area bottom Part 1 a.  The value of this bond if it paid interest annually would be ​$enter your response here. ​(Round to the nearest​ cent.) Part 2 b.  The value of this bond if it paid interest semiannually would be ​$enter your response here. ​(Round to the nearest​ cent.)

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41)What am I doing wrong?

You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 8.6 percent coupon bonds are selling at a price of $832.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding, answer the following questions. Problem 13.17 a1-a2(a1) Your answer is incorrect. What is the current YTM of the bonds? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to O decimal places, e.g. 15%.) Current YTM for the bonds %

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​Fingen's 16​-year, ​$1 comma 000 par value bonds pay 14 percent interest annually. The market price of the bonds is ​$1 comma 070 and the​ market's required yield to maturity on a​ comparable-risk bond is 11 percent. a.  Compute the​ bond's yield to maturity. b.  Determine the value of the bond to​ you, given your required rate of return. c.  Should you purchase the​ bond? Question content area bottom Part 1 a.  What is your yield to maturity on the Fingen bonds given the market price of the​ bonds?    enter your response here​%

​Fingen's 16​-year, ​$1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is ​$930 and the​ market's required yield to maturity on a​ comparable-risk bond is 14 percent.   a.  Compute the​ bond's yield to maturity. b.  Determine the value of the bond to​ you, given your required rate of return. c.  Should you purchase the​ bond?       Question content area bottom Part 1 a.  What is your yield to maturity on the Fingen bonds given the market price of the​ bonds?

8 years ago, Murky Corporation issued bonds with an original maturity of 15 years. When issued, the coupon rate of these bonds was set at 14%. These bonds currently have a price of 95 (not a typo) and you believe comparable bonds are earning around 7% currently. If you purchase the bonds at their current market price, what YTM will you earn? (6) PV 95 FV 100 PMT 14 N 8

6. The Mariposa Co. has two bonds outstanding. One was issued 25 years ago at a coupon rate of 9%. The other was issued 5 years ago at a coupon rate of 9%. Both bonds were originally issued with terms of 30 years and face values of $1,000. The going interest rate is 14% today. a. What are the prices of the two bonds at this time? b. Discuss the result of part (a) in terms of risk in investing in bonds.

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Answer problem 8.30(c)

f10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 9%, the maturity risk premium on all 10- ear bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T- Donds, what is the default risk premium on the corporate bond? Select the correct answer. O a. 2.64% O b. 2.16% Oc2.88% d. 2.40% e. 3.12%

What is the yield on a corporate bond with a $1000 face value purchased at a discount price of $875, if it pays 8% fixed interest for the duration of the bond? yield = [ ? ] % Give your answer as a percent rounded to the nearest hundredth. Hint: yield : interest paid price paid Enter at 2003 - 2021 Acellus Corporation. All Rights Reserved. MacBook 80 DD F4 F5 F6 F7 F8 F9 F10 #3 2$ & 3 4 7 9. E T Y U * 00

8. Bond Pricing. A 6-year Circular File bond with face value $1,000 pays interest once a year of $80 and sells for $950. (LO6-2) a. What is its b. What is its yield to maturity? c. If Circular wants to issue a new 6-year bond at face value, what coupon rate must the bond offer? coupon rate?

15. Staind plc has 8.5 per cent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. The par value of the bond is E1000. If the YTM on these bonds is 9.75 per cent, what is the current bond price? А. 922 В. 1200 C. 980 D. 1000

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quiz 7

1. Consider the following four bonds (assuming semi-annual compounding and the par value of $1,000) C 10% 25 40 a) What is the price of each bond if the required yield is 10%? b) What is the price of each bond if the required yield decreases from 10% to 9%, and by what percentage did the price of each bond change? c) What is the price of each bond if the required yield increases from 10% to 11%, and by what percentage did the price of each bond change? d) From your answers to Question 1, parts b and c, what can you say about the relative price volatility of a bond when the yield decreases compared to when the yield increases? Comparing bonds A, B, and C, what can you say about the relative price volatility of a bond with longer maturity compared to one with shorter maturity? e) f) Coupon Rate Maturity (years) A 10% 10 B 10% D 12% 10 Comparing bonds A and D, what can you say about the relative price volatility of a bond with lower coupon rate compared to one with higher coupon rate?

13. Problem 6.11 (Default Risk Premi um) еВook A company's 5-year bonds are yielding 9.05% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate (r*) is 2.65%. The average inflation premium is 2.15%, and the maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. If the liquidity premium is 0.75%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places. %

Homework i S 99+ Ashburn Company issued 15-year bonds two years ago at a coupon rate of 9.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Yield to maturity W X ((( % Saved 94°F Mostly sunny Save & Exit Check m )) 9/

Problem 2: Complex Systems has an outstanding issue of $1,000-par-value bonds with a 12% coupon interest rate. The issue pays interest annually and has 11years remaining to its maturity date. If bonds of similar risk are currently earning a rate of return of 7%, how much should the Complex Systems bond sell for today? a. b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond. If the required return were at 12% instead of 7%, what would be the current value of Complex Systems' bond? Contrast this finding with your findings in part a and discuss. C.

6. Basic bond valuation   Complex Systems has an outstanding issue of ​$1,000​-par-value bonds with a 12​% coupon interest rate. The issue pays interest annually and has 18 years remaining to its maturity date.   Please anewer B   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 were at 12​% instead of 8​%, what would the current value of Complex​ Systems' bond​ be? Contrast this finding with your findings in part a and discuss.

#1 The market price of a semi-annual pay bond is $994.42. It has 19.00 years to maturity and a coupon rate of 6.00%. Par value is $1,000. What is the yield to maturity? Submit Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434)) unanswered not_submitted Attempts Remaining: Infinity %23

Hello, Please, I need help solving this problem(7.8). Please give me as many details as you can. Thank you,