ProblemsEasyProblems7-1BOND VALUATION Madsen Motors's bonds have 23 years remaining to maturity. Interestis paid annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yieldto maturity is 11%. What is the bond's current market price?1-47-2 YIELD TO MATURITY AND FUTURE PRICE A bond has a $1,000 par value, 12 years to matu-rity, and an 8% annual coupon and sells for $980.a. What is its yield to maturity (YTM)?b. Assume that the yield to maturity remains constant for the next three years. What willthe price be 3 years from today?7-3 BOND VALUATION Nesmith Corporation's outstanding bonds have a $1,000 par value, an8% semiannual coupon, 14 years to maturity, and an 11% YTM. What is the bond's price?7-4 YIELD TO MATURITY A firm's bonds have a maturity of 8 years with a $1,000 face value,have an 11% semiannual coupon, are callable in 4 years at $1,154, and currently sell at aprice of $1,283.09. What are their nominal yield to maturity and their nominal yield to call?What return should investors expect to earn on these bonds?Intermediate7-5 BOND VALUATION An investor has two bonds in his portfolio that have a face value of$1,000 and pay an 11% annual coupon. Bond L matures in 12 years, while Bond S maturesin 1 year.a. What will the value of each bond be if the going interest rate is 6%, 8%, and 12%?Assume that only one more interest payment is to be made on Bond S at its maturityand that 12 more payments are to be made on Bond L.b. Why does the longer-term bond's price vary more than the price of the shorter-termbond when interest rates change?Problems5-147-6 BOND VALUATION An investor has two bonds in her portfolio, Bond C and Bond Z. Eachbond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.2%.Bond C pays an 11.5% annual coupon, while Bond Z is a zero coupon bond.a. Assuming that the yield to maturity of each bond remains at 8.2% over the next 4years, calculate the price of the bonds at each of the following years to maturity:Years to MaturityPrice of Bond CPrice of Bond Z4321

Market price or current price of a bond = sum of present value of all future cash flows accruing…

BOND VALUATION Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yield to maturity is 1%. What is the bond's current market price? 7-1

BOND VALUATION Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yield to maturity is 1%. What is the bond's current market price? 7-1

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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Bond A pays annual interest, has 6 percent annual coupons, $1,000 face value, and currently has 6 percent yields to maturity. The bond has 12 years to maturity. If the market rate of interest rises unexpectedly to 7 percent, what is the percentage change in the price of Bond A? A) -3.39% B) -5.73% C) -6.08% D) -7.94%
еВook Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. a. What is the yield to maturity at a current market price of 1. $822? Round your answer to two decimal places. % 2. $1,107? Round your answer to two decimal places. % b. Would you pay $822 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if ra = 13%? I. You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond. II. You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return. III. You would buy the bond as long as the yield to maturity at this price is less than your required rate of return. IV. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. You would not buy the bond as long as the yield to maturity at this price is…
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(Yield to maturity) A bond's market price is $825. It has a $1,000 par value, will mature in 6 years, and has a coupon interest rate of 11 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.)
Problem: A company has issued three bonds (Par Value S1,000) with the following data: What happends to the bond prices as each bond approaches the maturity date? (assume similar bonds with 15 year maturity sell for 10% coupon rate and that this rate stays const. over time) Market rate 10% 5-years ago 10-years ago 25 year bond Issue date Maturity Coupon rate Coupon Payment Today 15 year bond 10% 20 year bond 7% 13% 70 100 130 15 15 15 Positive Values Positive Values Positive Values 6. 8. 9. 10 11 12 13 14
15 year bond have an annual coupon interest of 9% make interest payment on a semi-annual basis and have $1,000 par value if the bonds are trading with a market required yield to maturity of 17% are these premium for discount bonds? What is the price of the bonds?
A corporate bond has 23 years to maturity, a face value of $1,000, a coupon rate of 5.5%, and pays interest semiannually. The annual market interest rate for similar bonds is 3.3%. Part 1 What is the value of the bond? 0+ decimals
What is the return on a bond that was issued at 9% coupon rate, 10% YTM, for five years, Face value of $1000 if YTM changed from 10% to 12% after the receipt of the first coupon and the bond was sold (the bond was sold at the beginning of the second year? A) 11, 50% B. 6, 98% C. 8,23 % D. 11,00%
What is the bond's duration in years? Information from prior You see a five-year bond trading in the market with the following characteristics: $1,000 face value, 9% coupon with 5 years to maturity. Assume market interest rates are 8.5% and that coupon payments are annual.
A 9 year bond with maturity value of $4300.02 and a yield rate of 4.9% was sold 18 months before maturity. If the seller earned 6% on the bond over the time that it was held, then for how much did they sell it? Give your answer rounded to the nearest cent
(Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 8 percent. The interest is paid semiannually and the bonds mature in 8 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 15 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.)
Note: Coupons are paid semi-annually unless otherwise noted. Coupon rates and yield are annual numbers unless otherwise noted. Par value/face value is always $1000. All bonds have a par value of $1000. years to maturity coupon rate yield to maturity 25 10.6% 9% What is the value of the bond? Answer:

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