General Accounting A convertible bond has a 8% annual couponand 15 years to maturity. The face value is$1,000 and the conversion ratio is 40. Thestock currently sells for $20.875 per share.Similar nonconvertible bonds are priced toyield 9%. The value of the convertible bondis at least

The problem requires the determination of the value of the convertible bond. A convertible bond is a…

Answered: A convertible bond has a 8% annual…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The face value of the bond is $10,000 with annual coupon payment. The maturity period is 6 years with the duration of 5.37 years and YTM of 14%. Determine the current market price of the bond. Answer Choices: a. The current market price of the bond is $10,000.00 b. The current market price of the bond is $6,315.26 c. The current market price of the bond is $8,051.02 d. The current market price of the bond is $7,448.90
A 10-year bond with coupons at 5% convertible quarterly is redeemed at 1500. If the bond is purchased at P 900 to yield 10% convertible quarterly, find the face value of the bond.
A 10-year bond earns interest at 10.2 percent convertible semiannually and has a yield rate of 7.4 percent convertible semiannually. If the book value immediately after the 7th coupon payment is 1071.75 dollars, and the book value immediately after the 11th coupon payment is 1019.48 dollars, what is the face value? Note: Don't assume that the face value and redemption value are the same. Answer= dollars.
The 7-year $1,000 par bonds of Vail Inc. pay 9% interest. The market’s required yield to maturity on a comparable-risk bond is 7%. The current market price for the bond is $1,100. What is the value of the bond to you given the yield to maturity on a comparable risk bond? Should you purchase the bond at the current market price?
A three-year, 1000 dollars, 6 percent bond with semiannual coupons has redemption amount 1,040 dollars. Make amortization tables for this bond if it is bought to yield a nominal rate of 4 percent convertible semiannually.
A 8-year bond with a face value of 1000 dollars earns interest at 9.9 percent convertible semiannually. If the bond sells for 1096.14 dollars to yield an investor 7.8 percent convertible semiannually, what is the redemption value? Answer = dollars.
The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 11 years until maturity. You can purchase the bond for $1,155. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 3 percent?
A 450,000 bond is redeemable at 550,000 after 5 years. Coupons are given at 5% convertible semi-annualy. Find the amount of the semi-annual coupon.
A 14-year, $1,000 par value Fingen bond pays 6% interest annually (assume semi- annual payments). The price of the bond is $1,100 and the market's required yield to maturity on a comparable-risk bond is 5.50%. a. Compute the bonds yield to maturity. b. Determine the value of the bond to you, given your required rate of return (the YTM on a comparable-risk bond). c. Should you purchase the bond? a. b. Coupon rate Par (FV) Years (n) m PMT PV (price) YTM Coupon rate Par (FV) Years (n) m PMT PV (price) YTM 6.0% $1,000 14 2 $30 Calculation $1,100 6.0% $1,000 14 2 $30 Calculation Note: if you want PV to be a positive number, you must use a minus sign for both pmt and FV 5.50%
A bond with a face value of 1000 and a redemption value of 1080 has an annual coupon rate of 8% payable semiannually. The bond is bought to yield an annual nominal rate of 10% convertible semiannually. At this yield rate, the present value of the redemption value is 601 on the purchase date. Calculate the purchase price of the bond. A. 911 B. 923 C. 956 D. 974 E. 984
A bond has 9 years until maturity with a coupon rate of 4% and anannual coupon payment of $50 and a future value of $1,000. Calculate the Present Value. The same bond has a future value of $1,000 (keeping the same priorassumptions (9 years until maturity, 4% coupon rate), however,excluding the annual coupon payment). Calculate the Present Value.
A bond with a face value of P1,500,000 is sold at P1,400,000. If the bond matures in 5 years and pays 15 percent per annum, how much should the annual earning interest be? Round off to four decimal places in the final answer/s.

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A convertible bond has a 8% annual coupon and 15 years to maturity. The face value is $1,000 and the conversion ratio is 40. The stock currently sells for $20.875 per share. Similar nonconvertible bonds are priced to yield 9%. The value of the convertible bond is at least