1. Ozarks Managed Care Inc. issued some callable bonds 19 years ago with 30-year life at their par value of $1,000. These bonds pay9% coupon rate with annual payment. The firm just announced that these bonds are being called with $100 call premium. A non-callable bond with the same features (time till maturity; coupon rate, and par value) and same risks are selling at $1195 a piece on themarket today. What's the yield to maturity on the non-callable bonds? Please round your answer to 2 decimal places and skip the%sign, e.g. put 2.35 instead of 2.35%.

To calculate the yield to maturity (YTM) on the non-callable bonds, we need to find the discount…

Answered: 1. Ozarks Managed Care Inc. issued some…

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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2. Cameron Corporation is offering a new bond issue. It has a $1000 par value, an 8% coupon rate and pays annual interest. It has a 9 year term. Current market interest rates have fallen to 7% during the regulatory filings for the bond. a. Based on current conditions, what will the market price of Cameron's bonds be? b. You bought one of the bonds at issue but one year later need cash and have to sell it. Now the current market rate of interest is 6%. What will your bond price be under these conditions? c. Based on (a) and (b), what would your one year return on your investment be ?
AB Bank has AAA-rated, 15-year zero-coupon bonds with a face value of $400 million. The bonds currently are yielding 9.5 percent in the over-the-counter market. I a)- What is the 10- day VAR for these bonds? b)- What is the DEAR?
Birchip Wood Chip Ltd issued 15-year bonds one year ago at a coupon rate of 4.8%. The bonds have a face value of $1,000 and make half-year payments. If the YTM on these bonds is 5.3%, what is the current bond price?
IS - Sampoerna. O Dashboard VitalSource Booksh. O Spotify - Web Player Company XYZ's bonds have 12 years remaining to maturity, interest is paid annually, the bonds have $1,000 par value, and the coupon rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?* a. 828.78 b. 968.39 c. 1,000,00 d. 1,075.36 O e. none of the above Which of the following statement is (are) correct? a zero coupon bend means the bond does not give (pay) coupon until maturity O b. the price of zero coupon bond is always at discount until its maturity O c. the price of bond will be at discount when the coupon is lower than its interest ra da and b e. a, b and c
Problem: A company has issued three bonds (Par Value S1,000) with the following data: What happends to the bond prices as each bond approaches the maturity date? (assume similar bonds with 15 year maturity sell for 10% coupon rate and that this rate stays const. over time) Market rate 10% 5-years ago 10-years ago 25 year bond Issue date Maturity Coupon rate Coupon Payment Today 15 year bond 10% 20 year bond 7% 13% 70 100 130 15 15 15 Positive Values Positive Values Positive Values 6. 8. 9. 10 11 12 13 14
A company is trying to issue a 15-year, BB-rated, semi-annual paying bond with 6% annual coupon rate. If the appropriate annual discount rate for the bond issuance is 3% and the current credit risk premium for BB-rated bond is 3.5%, what is the current market price of this bond? $952.55 $852.25 $1011.36 $1213.25
5. Grohl Co. issued 8-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual payments. If the YTM on these bonds is 11 percent, what is the current bond price? a) $1,531.43 b) $1,010.00 c) $718.96 d) $1,005.00 e) $1,000.00
Wildhorse Corp. has 18-year bonds outstanding. These bonds, which pay interest semiannually, have a coupon rate of 9.875 percent and a yield to maturity of 6.0 percent. Assume face value is $1,000. Problem 8.30(a) Your answer is incorrect. Compute the current price of these bonds. (Round answer to 2 decimal places, e.g. 15.25.) Current price $ EA
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.6% (annual payments). The yield to maturity on this bond when it was issued was 5.7%. What was the price of this bond when it was issued? www When it was issued, the price of the bond was $. (Round to the nearest cent.)
Beachwear ‘n More bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are priced at $1,063.15. The company issued this 20-year bond eight years ago. What is the yield to maturity?
Verdict Inc. issued a 20-year bond 4 years ago. Because it is a delayed-start bond, it starts paying annual coupons 9 years ago. The bond has a face value (FV) of $1000, YTM of 6%, and coupon rate of 8%. What is the price of the bond in 5 years time

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