A convertible bond has a face value of $1,000 and the conversion price is $50 per share. The stock is selling at $30 per share. The bond pays $65 per year in interest and is selling in the market for $950. It matures in 7 years. Market rates are 10% annually. a. What is the conversion ratio? b. What is the conversion value?
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- A 2-year zero-coupon bond with $100 principal is trading at $95.00. Price of a 2-year coupon bond with annual coupon of $10 and principal of $100 is $104.00. (a) What is the 2-year spot rate from t = 0 to t = 2? (b) What is the spot rate per year from t = 0 to t = 1?Bond P is a premium bond with a 10 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 8 percent, and have five years to maturity. (Assume par value of K1,000)(i) What is the current yield for Bond P and Bond D?(ii) If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D?(iii)Explain your answers and the interrelationship among the various types of yields.Suppose that a 20-year 7% bond selling for $816 and held to maturity has reinvestment rate of 6%. Coupon is paid twice a year. Par value is $1,000. What is the annual total return?
- What is the value of a bond that has a par value of $1,000, a coupon of $120 (annually), and matures in 10 years? Assume a required rate of return of .0702. Instruction: Type your answer in dollars, and round to two decimal places.A bond with a face value of $1,000 has 10 years until maturity, has a coupon rate of 5.2%, and sells for $1,105. a. What is the current yield on the bond? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the yield to maturity if interest is paid once a year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) c. What is the yield to maturity if interest is paid semiannually? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.)Consider a(n) Ten-year, 14.5 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 11.5 percent. a. What is the price of the bond?b. If the rate of interest increases 1 percent, what will be the bond’s new price?c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should be indicated by a minus sign.)d. Repeat parts (b) and (c) assuming a 1 percent decrease in interest rates. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. Price of the bond b. Bond's new price c. Percentage change % d. Bond's new price Percentage change %
- What is the Macaulay duration of a semi-annual bond with a coupon rate of 7 percent, five years to maturity, and a current price of $959? What is the modified duration? Duration is __. years. Modified duration is __ years.A bond has a $1,000 face value, a market price of 1,036, and pays interest payments of $70 every year. What is the coupon rate?A 10-year bond has face value (redemption value) $250,000 and quarterly coupons of 2%. Consider the time right after the 12th coupon has been paid, when the yield is 3.4%. (a) What is the price of the bond? (b) Compute the price of the bond if the yield were to increase by 1 basis point (a basis point is 1/100 of 1%). What is the absolute value of the difference between that price, and your answer to part a)? (c) Would the yield have to increase or decrease in order for the bond to increase in value by $885.53? (d) Based only on your answer to b), approximately how many basis points (bp) would the yield have to move in order for the bond to increase in value by $885.53? (Answer as a positive integer.) b): #5(c): (A) Decrease (B) Increase 5(d): Answer correct to 2 decimals. Select Answer correct to 2 decimals. Answer as a positive integer
- A 3-month zero-coupon bond is selling for $99.7 and a 10-year zero-coupon bond is selling for $54.3. Both bonds have a face value of $100. What's the 10-year - 3-month spread in their yields? Answer in percent, rounded to one decimal place. Give typing answer with explanation and conclusionFor a company, you plan to buy the following bond: Time to maturity, 6 years; coupon rate, 8%; Coupon payment, annual; Market interest rate, 8%; Face value, $1,000. Using Excel, calculate the duration of the bond. Using Excel, calculate the accumulated value of invested payment(or receipt) when you find market interest rate a year later is now 8%, 9%, and 7%, respectively. Using Excel, calculate geometric average rate of return (or realized compound return).A newly issued bond pays its coupons once a year. Its coupon rate is 4.7%, its maturity is 15 years, and its yield to maturity is 7.7%. a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6.7% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Holding-period return % b. If you sell the bond after one year when its yield is 6.7%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount (OID) tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Tax on interest income $ Tax on capital gain $ Total taxes $ c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)…