10-1Bond ValuationBuner Corp.'s outstanding bond has the following characteristics:Years to maturity6.0Coupon rate of interest8.0%Face value$1,000If investors require a rate of return equal to 12 percent on similar risk bondsand interest is paid semiannually, what should be the market price of Buner'sbond?

The question is based on the concept to calculate value of bond, which help in determination of fair…

Answered: 10-1 Bond Valuation Buner Corp.'s…

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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Activity 2 XYZ Co. Ltd is considering investing in a bond currently selling for $8,800. The coupon rate is 8%. The bond has a face value of $10,000 and maturity of 4 years. The appropriate discount rate for bonds of this type is 10%. (i) What is the intrinsic value of the bond? Should the company buy the bond? (ii) What is the yield to maturity on this bond?
A 10-year $6000 par-value bond with an annual coupon rate of 6% convertible semiannually is priced using a nominal yield rate of 12% convertible semiannually. a. Is the bond sold at discount, at premium, or neither? Find the price. b. Find the amount for the adjustment of principal in the 7th coupon.
Part 1 Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1,000 and assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity 1 year 2 years 3 years 4 years 5 years Zero-Coupon Yields 4.00% 4.30% 4.50% 4.70% 4.80% a. What is the yield to maturity on this bond? b. If the yield to maturity on this bond increased to 5.20%, what would the new price be?
Maturity (years) Price 2.83% 5.79% The above table shows the price per $100-face value bond of several risk-free, zero-coupon bonds. What is the yield to maturity of the four-year, zero- coupon, risk-free bond shown? 2.85% 12.07% 1 $97.25 2.89% 3 2 $94.53 $91.83 5 4 $89.23 $87.53
7A-2 Consider each of the bonds below: 7A-2.Bond A has an 8-year maturity and a 7% annual coupon.Bond B has a 10-year lifespan and a 9% annual coupon.Bond C has a 12-year maturity with no coupon.The bonds have a $1,000 face value and an 8% yield to maturity. Which of the comments below is the most accurate?a. Bond A is sold at a discount, while Bond B is sold at a higher price.b. Bond C would see the highest percentage rise in price if the yield to maturity of each bond drop to 7%.c. Bond C has the highest chance of reinvestment pace.d. Both a and b are right statements.e. All of the above claims are true.
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31 ation An 8%, 8-year bond pays annual coupons and has 6 years to maturity. If the market interest rate is 9%, calculate the price of this bond. Show the (abbreviated) time line, the key entries/steps of FCS, and the (abbreviated) equation/expression of NS. Typing tips:
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View Policies Current Attempt in Progress Carla Vista, Inc., has four-year bonds outstanding that pay a coupon rate of 7.0 percent and make coupon payments semiannually. If these bonds are currently selling at $921.69. What is the yield to maturity that an investor can expect to earn on these bonds? Assume face value is $1,000. (Round answer to 1 decimal place, e.g. 15.2%) Yield to maturity % What is the effective annual yield? (Round answer to 1 decimal place, eg. 15.2%) Effective annual yield. %
Question content area top Part 1 (Yield to maturity) A bond's market price is $1,200. It has a $1,000 par value, will mature in 12 years, and has a coupon interest rate of 8 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 24 years? What if it matures in 6 years? Question content area bottom Part 1 a. The bond's yield to maturity if it matures in 12 years is enter your response here%. (Round to two decimal places.) Part 2 b. The bond's yield to maturity if it matures in 24 years is enter your response here%. (Round to two decimal places.) Part 3 c. The bond's yield to maturity if it matures in 6 years is enter your response here%. (Round to two decimal places.)
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Bond Valuation1. A 3-year bond with 10% coupon rate and $1000 face value yield to maturity is 8% . Assuming annualcoupon payment, calculate the price of the bond. 2. A 10-year bond with 12.5% coupon rate and $1000 face value yield to maturity is 14.5% . Assumingannual coupon payment, calculate the price of the bond.

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