32. Two bonds have par values of $1,000. Bond A is a 5% annual-pay, 10-year bond priced to yield 8% as an annual rate; the other (Bond B) is a 7.5% annual-pay, 15-year bond priced to yield 6% as an annual rate. The values of these two bonds would be: Bond A Bond B А. $762.41 $847.08 $1,147.00 31,156.00 В. $796.15 C. $796.15

32. Two bonds have par values of $1,000. Bond A is a 5% annual-pay, 10-year bond priced to yield 8% as an annual rate; the other (Bond B) is a 7.5% annual-pay, 15-year bond priced to yield 6% as an annual rate. The values of these two bonds would be: Bond A Bond B А. $762.41 $847.08 $1,147.00 31,156.00 В. $796.15 C. $796.15

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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Back to Assignment Attempts 0 Keep the Highest 0/2 5. The Cost of Capital: Cost of New Common Stock If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. There are two approaches to use to account for flotation costs. The first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. Because the investment cost is increased, the project's expected rate of return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. The second approach involves adjusting the cost of common equity as follows: Cost of equity from new stock r D IP-Fi +6 The difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. Quantitative Problem: Barton Industries expects next year's annual dividend, D₁, to be $2.50 and it expects dividends to grow at a…
All parts sirpls
Ef 420.
A bond with $898,000 face value that pays 10% coupon is issued at 102 1/2, i.e., 102.5% of its face value. Is this bond issues at premium of discount? And what is the amount of cash received as a result of issuing this bond? a. Premium; $920,450 b. Discount; $673,500 c. Premium; $987,800 d. PAR Value; $898,000 A B C D
Qd 89.
Please explain both a and b
Kk.428.
A P 1,000,084 issue, 18-year bond was sold at 89%. What is the bond rate if interest of this investment is 2.522?
42. A bond pays 9% yearly interest in semi-annual payments for 6years. The current yield on similar bonds is 12%. To determinethe market value of this bond, you musta. find the interest factors (IFs) for 12 periods at 12%.b. find the interest factors (IFs) for 6 periods at 9%.c. find the interest factors (IFs) for 6 periods at 6%.d. find the interest factors (IFs) for 12 periods at 6%.43. What is the approximate yield to maturity for a seven-year bondthat pays 11% interest on a $1000 face value annually if thebond sells for $952a. 10.5%b. 10.6%c. 11.5%d. 12.1%44. A ten-year bond pays 11% interest on a $1000 face valueannually. If it currently sells for $1,195, what is itsapproximate yield to maturity?a. 9.33%b. 7.94%c. 12.66%d. 8.10%
Consider a newly issued 4-year, 3.11% annual-pay bond trading at par. The present values of each of the bond’s promised payments, discounted at 6.11%. Its Macaulay duration is closest to A. 3.625 years. B. 3.723 years. C. 3.811 years. D. 3.924 years.
Bond A is a 15-year, 10.50% semiannual-pay bond priced with a yield to maturity of 8.00%, while Bond B is a 15-year, 7.35% semiannual-pay bond priced with the same yield to maturity. Given that both bonds have par values of $1,000, the prices of these two bonds would be: Bond A Bond B A. $1,216.15 $944.67 B. $1,216.15 $913.54 C. $746.61 $913.54
Brooks Books’ bonds have 13 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 8 percent; and the yield to maturity is 7.5 percent. What is the bond’s current market price? a. $1,000.00 b. $980.72 c. $1,040.63 d. $650.07 e. $1,080.00

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