(Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 16 percent. The interest is paid semiannually and the bonds mature in 11 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 13 percent, what is the value of the bond? What is its value if the interest is paid annually? a. The value of the Enterprise bonds if the interest is paid semiannually is $ (Round to the nearest cent.) b. The value of the Enterprise bonds if the interest is paid annually is $ (Round to the nearest cent.) (Yield to maturity) A bond's market price is $925. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 9 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12 years? What if it matures in 3 years? a. The bond's yield to maturity if it matures in 6 years is b. The bond's yield to maturity if it matures in 12 years is c. The bond's yield to maturity if it matures in 3 years is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)

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
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(Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 16 percent. The interest is paid semiannually and the bonds mature in 11 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 13 percent, what is the value of the bond?
What is its value if the interest is paid annually?
a. The value of the Enterprise bonds if the interest is paid semiannually is $
(Round to the nearest cent.)
b. The value of the Enterprise bonds if the interest is paid annually is $
(Round to the nearest cent.)
Transcribed Image Text:(Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 16 percent. The interest is paid semiannually and the bonds mature in 11 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 13 percent, what is the value of the bond? What is its value if the interest is paid annually? a. The value of the Enterprise bonds if the interest is paid semiannually is $ (Round to the nearest cent.) b. The value of the Enterprise bonds if the interest is paid annually is $ (Round to the nearest cent.)
(Yield to maturity) A bond's market price is $925. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 9 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the
bond matures in 12 years? What if it matures in 3 years?
a. The bond's yield to maturity if it matures in 6 years is
b. The bond's yield to maturity if it matures in 12 years is
c. The bond's yield to maturity if it matures in 3 years is
%. (Round to two decimal places.)
%. (Round to two decimal places.)
%. (Round to two decimal places.)
Transcribed Image Text:(Yield to maturity) A bond's market price is $925. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 9 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12 years? What if it matures in 3 years? a. The bond's yield to maturity if it matures in 6 years is b. The bond's yield to maturity if it matures in 12 years is c. The bond's yield to maturity if it matures in 3 years is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)
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