Dallas Corporation has three non-callable bonds outstanding. All three have an annual coupon rate of 5.3 percent and a $1000 par value. The first bond has three years left to maturity. The second bond has six years left to maturity. The last bond has ten years left to maturity. Assume for simplicity that the market rate for all three bonds is now 8.5 percent and these bonds pay annual interest payments. What is the value for the first bond with three years left to maturity? What is the value for the second bond with six years left to maturity? What is the value for the first bond with ten years left to maturity?

Dallas Corporation has three non-callable bonds outstanding. All three have an annual coupon rate of 5.3 percent and a $1000 par value. The first bond has three years left to maturity. The second bond has six years left to maturity. The last bond has ten years left to maturity. Assume for simplicity that the market rate for all three bonds is now 8.5 percent and these bonds pay annual interest payments. What is the value for the first bond with three years left to maturity? What is the value for the second bond with six years left to maturity? What is the value for the first bond with ten years left to maturity?

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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McConnell Corporation has bonds on the market with 19 years to maturity, a YTM of 6.4 percent, a par value of $1,000, and a current price of $1,266.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?
Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value of $1, 000. The bonds are callable at $1, 230. One year interest rates are 8 percent. There is a 60 percent probability that long-term interest rates one year from today will be 10 percent, and a 40 percent probability that they will be 8 percent. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in order to sell at par value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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Blue Jazz, Inc., has 5.4 percent coupon bonds on the market that have 20 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 5.2 percent, the current price of the bond $______. Round it two decimial places, and do not include the $ sign, e.g., 935.67. Your Answer: Answer
A corporate bond pays interest twice a year and has 22 years to maturity, a face value of $1,000 and a coupon rate of 6.1%. The bond's current price is $1,463.61. It is callable starting 16 years from now (years to call) at a call price of $1,047. What is the bond's (annualized) yield to maturity?
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Grohl Co. issued 9-year bonds a year ago at a coupon rate of 7 percent. The bonds make semiannual payments. If the YTM on these bonds is 10 percent, what is the current bond price?
McConnell Corporation has bonds on the market with 14 years to maturity, a YTM of 8.8 percent, a par value of $1,000, and a current price of $1,296.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.8% (annual payments). The yield to maturity on this bond when it was issued was 6.3%. What was the price of this bond when it was issued? When it was issued, the price of the bond was $1,108.85 (Round to the nearest cent.)

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