ance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well t mar value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond with emiannual payments has 5 percent annual interest and has 14 years remaining to maturity. The current yield to maturity on similar bonds is 10 percent. (Use Excel to arrive at the answers. Round the final answers to 2 decima laces.) What is the current price of the bonds? Current price By what percent will the price of the bonds increase between now and maturity? rice increases by What is the annual compound rate of growth in the value of the bonds? nnual compound rate
ance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well t mar value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond with emiannual payments has 5 percent annual interest and has 14 years remaining to maturity. The current yield to maturity on similar bonds is 10 percent. (Use Excel to arrive at the answers. Round the final answers to 2 decima laces.) What is the current price of the bonds? Current price By what percent will the price of the bonds increase between now and maturity? rice increases by What is the annual compound rate of growth in the value of the bonds? nnual compound rate
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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Transcribed Image Text:Problem 10-13 bond price
Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below
par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond with
semiannual payments has 5 percent annual interest and has 14 years remaining to maturity. The current yield to
maturity on similar bonds is 10 percent. (Use Excel to arrive at the answers. Round the final answers to 2 decimal
places.)
a. What is the current price of the bonds?
Current price
b. By what percent will the price of the bonds increase between now and maturity?
Price increases by
c. What is the annual compound rate of growth in the value of the bonds?
Annual compound rate
Transcribed Image Text:Problem 10-14 yield to maturity
Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which is also the amount of principal
to be paid at maturity. The bonds are currently selling for $700. They have 10 years to maturity. Annual interest is 11
percent ($110), paid semiannually.
Compute the yield to maturity. (Use Excel to arrive at the answers. Round the final answer to 2 decimal places.)
Yield to maturity
Problem 10-1 Price of Bond
Show Transcribed Text
a. 7
percent
b. 8
percent
c. 13
percent
%
The Wild Rose Company has $1,000 par value (maturity value) bonds outstanding at 9 percent interest. The bonds will
mature in 20 years with annual payments.
Compute the current price of the bonds if the present yield to maturity is: (Use Excel to arrive at the answers. Round
the final answers to 2 decimal places.)
Price of the
bond
$
Ú
$
Ć
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