DO NOT ANSWER IN EXCEL Q#4. Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments. A. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell? B. Suppose that 2 years after the initial offering, the going interest rate had risen to 12%. At what price would the bonds sell? Suppose further that the interest rate remained at 12% for the next 8 years. What would happen to the price of the bonds over time?

DO NOT ANSWER IN EXCEL Q#4. Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments. A. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell? B. Suppose that 2 years after the initial offering, the going interest rate had risen to 12%. At what price would the bonds sell? Suppose further that the interest rate remained at 12% for the next 8 years. What would happen to the price of the bonds over time?

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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Your answer is correct. Cullumber, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 7.5 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 6.0 percent, how much will Cullumber pay to buy back its current outstanding bonds? Assume face value is $1,000. (Round answer to 2 decimal places, e.g. 15.25.) Cullumber will pay +A $ 1084.72
2. Cameron Corporation is offering a new bond issue. It has a $1000 par value, an 8% coupon rate and pays annual interest. It has a 9 year term. Current market interest rates have fallen to 7% during the regulatory filings for the bond. a. Based on current conditions, what will the market price of Cameron's bonds be? b. You bought one of the bonds at issue but one year later need cash and have to sell it. Now the current market rate of interest is 6%. What will your bond price be under these conditions? c. Based on (a) and (b), what would your one year return on your investment be ?
am. 39.
Five years ago, your firm issued $1,000 par, 25-year bonds, with a 10% coupon rate and a 11% call premium. Assume semiannual compounding. a. If these bonds are now called, what is the actual yield to call for the investors who originally purchased them at par? Do not round intermediate calculations. Round your answer to two decimal places. % annually b. If the current interest rate on the bond is 5% and the bonds were not callable, at what price would each bond sell? Do not round intermediate calculations. Round your answer to the nearest cent. $
O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 20 years. Their nominal annual, not semiannual yield to maturity is 7.75%, they pay interest semiannually, and they sell at a price of $700. What is the bond's nominal coupon interest rate? Do not round your intermediate calculations. a. 4.77% b. 2.39% c. 2.30% d. 4.41% e. 4.60%
Tweet Ltd recently issued non-callable bonds that mature in 10 years. They have a par value of $1,000 and an annual coupon of 6%. If the current market interest rate is 8.0%, at what price should the bonds sell? Select one: a. $897.21 b. $855.26 c. $865.79 d. $831.14
Last year, a firm issued 30-year, 8% annual coupon bonds at a parvalue of $1,000. (1) Suppose that 1 year later the going rate dropsto 6%. What is the new price of the bonds, assuming that they nowhave 29 years to maturity? ($1,271.81) (2) Suppose instead that 1year after issue, the going interest rate increases to 10% (ratherthan dropping to 6%). What is the price? ($812.61)
Pelzer Printing Inc. hasbonds outstanding with 9 years left to maturity. The bonds have a 9% annual coupon rate andwere issued 1 year ago at their par value of $1,000. However, due to changes in interest rates,the bond’s market price has fallen to $910.30. The capital gains yield last year was −8.97%.a. What is the yield to maturity?b. For the coming year, what are the expected current and capital gains yields?c. Will the actual realized yields be equal to the expected yields if interest rates change?If not, how will they differ?
Please answer question 1 without excel usage
solve this 2 question
Please help me with these questions. Please don't use excel
Suppose Ford sold an issue of bonds with a15-year maturity, a $1,000 par value, a 12% couponrate, and semiannual interest payments.(a) Two years after the bonds were issued, thegoing rate of interest on bonds such as thesefell to 9%. At what price would the bonds sell?(b) Suppose that, two years after the bonds’ issue,the going interest rate had risen to 13%. At whatprice would the bonds sell?(c) Today, the closing price of the bond is $783.58.What is the effective current yield?

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