Five years ago Tosev Inc. issued 30-year, $1,000 par value, semi-annual coupon bonds with a coupon rate of 9.10 percent. The bonds originally sold at a price of $1,010.32 per bond. Currently, those bonds have a market price of $1,118.15 per bond. The Chief Financial Officer of Tosev is currently considering issuing new bonds. These bonds will have a par value of $1,000, semi-annual coupon payments, term of 25 years and a coupon rate of 8 percent. Due to differences in the legal provisions of the bonds, the Chief Financial Officer estimates that the yield to maturity on the new bonds will be one percent higher than the current yield to maturity on the old bonds. Based on the Chief Financial Officer's estimate, what would be the price per bond of the new bonds today? $1,000.00 $896.67 None of the answers in this list is within $0.25 of the correct answer. $1,118.15 $817.44 $901.19
Five years ago Tosev Inc. issued 30-year, $1,000 par value, semi-annual coupon bonds with a coupon rate of 9.10 percent. The bonds originally sold at a price of $1,010.32 per bond. Currently, those bonds have a market price of $1,118.15 per bond. The Chief Financial Officer of Tosev is currently considering issuing new bonds. These bonds will have a par value of $1,000, semi-annual coupon payments, term of 25 years and a coupon rate of 8 percent. Due to differences in the legal provisions of the bonds, the Chief Financial Officer estimates that the yield to maturity on the new bonds will be one percent higher than the current yield to maturity on the old bonds. Based on the Chief Financial Officer's estimate, what would be the price per bond of the new bonds today? $1,000.00 $896.67 None of the answers in this list is within $0.25 of the correct answer. $1,118.15 $817.44 $901.19
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 15P
Related questions
Question
![Five years ago Tosev Inc. issued 30-year, $1,000 par value, semi-annual coupon
bonds with a coupon rate of 9.10 percent. The bonds originally sold at a price of
$1,010.32 per bond. Currently, those bonds have a market price of $1,118.15 per
bond. The Chief Financial Officer of Tosev is currently considering issuing new
bonds. These bonds will have a par value of $1,000, semi-annual coupon payments, a
term of 25 years and a coupon rate of 8 percent. Due to differences in the legal
provisions of the bonds, the Chief Financial Officer estimates that the yield to
maturity on the new bonds will be one percent higher than the current yield to
maturity on the old bonds. Based on the Chief Financial Officer's estimate, what
would be the price per bond of the new bonds today?
$1,000.00
$896.67
None of the answers in this list is within $0.25 of the correct answer.
$1,118.15
$817.44
$901.19
10
fs
%
f6
hp
f7
8](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdb6e8779-7192-4a39-9dd2-b6284f8e7d4b%2Fd78c9f89-5fbe-421e-85f4-4a95e5eccf0a%2Fnos4ll4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Five years ago Tosev Inc. issued 30-year, $1,000 par value, semi-annual coupon
bonds with a coupon rate of 9.10 percent. The bonds originally sold at a price of
$1,010.32 per bond. Currently, those bonds have a market price of $1,118.15 per
bond. The Chief Financial Officer of Tosev is currently considering issuing new
bonds. These bonds will have a par value of $1,000, semi-annual coupon payments, a
term of 25 years and a coupon rate of 8 percent. Due to differences in the legal
provisions of the bonds, the Chief Financial Officer estimates that the yield to
maturity on the new bonds will be one percent higher than the current yield to
maturity on the old bonds. Based on the Chief Financial Officer's estimate, what
would be the price per bond of the new bonds today?
$1,000.00
$896.67
None of the answers in this list is within $0.25 of the correct answer.
$1,118.15
$817.44
$901.19
10
fs
%
f6
hp
f7
8
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