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 ?

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 ?

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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am. 116.
f1. Subject:- Finance
A corporate bond with a 7.600 percent coupon has 15 years left to maturity. It has had a credit rating of BB and a yield to maturity of 9.9 percent. The firm has recently become more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 8.8 percent. (Assume interest payments are semiannual.) What will be the change in the bond's price in dollars? What will be the change in the percentage terms? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Change in bond price $78.90 Change in bond percent %
✪ 1. (10) Wine and Roses, Inc. offers an 7 percent coupon bond with semiannual payments and a yield to maturity of 5 percent. The bond matures in 30 years. a. What is the market price of a $1,000 face value bond? b. What is the current yield of the bond? c. Suppose that the bond will make a coupon payment in 35 days and an owner of this bond is contemplating to sell it. What is the accrued interest the seller is entitled to receive in this case? Assume 30 days/month
An investor is considering between purchasing a Treasury Bond and a bond from a large corporation. Both bonds have a face value of $1,000. The Treasury Bond has no risk, while the corporate bond has a 10% change of not repaying (a default). Both bonds are 2-year bonds and don't pay any coupons, only the final payment at maturity. a) Assuming that the interest rate in year 1 is 10% and in year 2 is expected to be 5%, what is the current price of each bond? Why are the values different? b) Now assume that the investor purchased the Treasury Bond a year has passed. How much can this bond be sold for if the interest rate is confirmed at 5%? c) Continue assuming that the investor purchased the Treasury Bond a year has passed. If the investor is offered the corporate bond for $800, should it be purchased? Explain.
Your answer is correct. Cullumber, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 7.5 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 6.0 percent, how much will Cullumber pay to buy back its current outstanding bonds? Assume face value is $1,000. (Round answer to 2 decimal places, e.g. 15.25.) Cullumber will pay +A $ 1084.72
you bought a 30-year bonds many years ago. The bond has par value of $ 1,000 and coupon rate of 12%, paid semi-annually. The current price of the bond is $1,137.99 and the yield to maturity is 10%. How many years ago did yoy buy the bond Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure
i need the answer quickly
Your company wants to pay off some long-term debt, so you decide to buy back some conventional 10-year bonds that you issued 8 years ago. The par value of the bonds is $1200, and the bonds were issued at a 5% coupon rate. Currently, other companies with the same risk profile as your company are offering new 2-year bonds at an interest rate of 8%. Assume that you are at the start of year 9, i.e., the 8th interest payment has been made. What is a fair offer to buy back the bonds? Answer:
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
a. Many years ago, Castles in the Sand Incorporated issued bonds at face value at a yield to maturity of 5.8%. Now, with 5 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 15%. What is now the price of the bond? (Assume semiannual coupon payments.) Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Bond price b. Suppose that investors believe that Castles can make good on the promised coupon payments but that the company will go bankrupt when the bond matures and the principal comes due. The expectation is that investors will receive only 85% of face value at maturity. If they buy the bond today, what yield to maturity do they expect to receive? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Yield to maturity %
Please help me with these questions. Please don't use excel

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