(Bond valuation) Five years ago XYZ International issued some 25-year zero-coupon bonds that were priced with a market's required yield to maturity of 9 percent and a par value of $1,000. What did these bonds sell for when they were issued? Now that 5 years have passed and the market's required yield to maturity on these bonds has climbed to 11 percent, what are they selling for? If the market's required yield to maturity had fallen to 7 percent, what would they have been selling for?

(Bond valuation) Five years ago XYZ International issued some 25-year zero-coupon bonds that were priced with a market's required yield to maturity of 9 percent and a par value of $1,000. What did these bonds sell for when they were issued? Now that 5 years have passed and the market's required yield to maturity on these bonds has climbed to 11 percent, what are they selling for? If the market's required yield to maturity had fallen to 7 percent, what would they have been selling for?

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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Two years ago, Company XYZ issued $100 million worth of ten-year bonds with a face value of $,000.00 and a coupon rate of 5%. Coupon payments are made semi-annually. Two years ago, the market yield-to-maturity was 3% p.a. Due to the increased insecurity facing the industry, the market yield to maturity is now 7% p.a. a) Determine the market price of the bonds at issue based on an appropriate model. b) Based on the yield-to-maturity today, assess whether the price has changed and proceed to determine its market price today. c) Compare the results in (a) and (b) above and interpret the sensitivity of bond prices to maturity and yield to maturity.
Please answer question 1 without excel usage
MM Motors, Inc. issued a bond 5 years ago. It has a coupon of 10% and will mature in 20 years. Interest rates have risen and the market rate for these bonds is now 12%. What is the price of this bond?
Please help me with these questions. Please don't use excel
Woolworth has 10 per cent coupon bonds making annual payments with a YTM of 6.5 per cent. The bond has a par value of $1000 and the current yield on these bonds is 8.42 per cent. How many years do these bonds have left until they mature? [Please enter the exact value, do not rounding up]
A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5 percent. What will be the change in the bond's price in dollars and percentage terms? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your percentage answers to 3 decimal places. (e.g., 32.161)) Change in the bond's price in dollars Change in the bond's price in percentage %
Apple has 8 percent coupon bonds on the market with ten years to maturity. The bonds make semiannual payments and currently sell for 95 percent of par Is this a discount bond or premium bond? Should YTM be higher than the coupon rate, or lower? What is the YTM of this bond in percentage? (keep two decimal points, for example, if your answer is 2.34%, write 2.34 as the answer) What is the current yield of this bond in percentage? (keep two decimal points, for example, if your answer is 2.34%, write 2.34 as the answer) What is the EAY of this bond in percentage? (keep two decimal points, for example, if your answer is 2.34%, write 2.34 as the answer)
Fixed Income Securities4. Today is t = 0. You have just bought a five-year zero-coupon Treasurybond with $100 face value. You paid $80.(a) What is the annually compounded yield to maturity on the bond?(b) Suppose that yields at all maturities decrease to 2% immediately after you havepurchased the bond. Calculate the annualized holding period return if you sellthe bond one year after you have purchased it, at t = 1.(c) What is the annually compounded yield to maturity on the bond at t = 1?
Toyota just issued ten-year bonds that make annual coupon payments of R50. Suppose you purchased one of these bonds at par value when it was issued. Right after your purchase, market interest rates jumped, and the YTM (interest rate) on your bond rose to six percent. What is the new price of you bond
James Cobin Co is a software development company that headquarters in Toronto and covers Canada, the United States, Japan, and Europe. The firm has issued bonds at face value at a yield to maturity at 6% a few years ago. Now with 10 years left until maturity, the yield to maturity has increased to 8%. a. Explain and interpret the change in the yield to maturity. b. What is the current price of the bond? Assume coupons are paid once a year. C Suppose that you purchased this bond today and are considenng selling it a year later. The yield to maturity is expected to be 10% a year later. Isit a good investment? Explain.
Occam Industrial Machines issued 145,000 zero coupon bonds six years ago. The bonds have a par value of $1,000 and originally had 30 years to maturity with a yield to maturity of 7 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.1 percent. Assume semiannual compounding for the bonds. What is the dollar price of the bonds? What is the market value of the company's debt? If the company has a $46 million market value of equity, what weight should it use for debt when calculating the cost of capital?

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