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?
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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
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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.)
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One year ago, a company issued 15-year, noncallable, 7.75% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 6.75%. What is the current price of the bonds?

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