Lumanat Inc. issued a semi-annual corporate bond with a 12% coupon interest rate, matures in 10 years and has a current market value of $650. The bond has a face value of $1000 and is callable in 2 years at $1050. What is the exact current annual yield for this bond? O a. None of the above O b. 16.7% O c. 23.3% O d. 17.1% Oe. 20.0% Of. 21.5% O g. 18.5% c

Lumanat Inc. issued a semi-annual corporate bond with a 12% coupon interest rate, matures in 10 years and has a current market value of $650. The bond has a face value of $1000 and is callable in 2 years at $1050. What is the exact current annual yield for this bond? O a. None of the above O b. 16.7% O c. 23.3% O d. 17.1% Oe. 20.0% Of. 21.5% O g. 18.5% c

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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A Corporation has a bond with a par value of $2,000 that sells for $1,900. The bond has a coupon rate of 6.45 percent and matures in 15 years. If the bond makes semiannual coupon payments, what is the YTM of the bond? O 5.45% O 6.99% O 6.54%
On 4 February 2010 a company issued a bond with a face value of $500,000 that matures exactly 25 years later. The coupon rate is 4% p.a. compounded half-yearly. What is the bond's value on 4 February 2018 assuming the market yield is 8% p.a. compounded half-yearly. $315,888.02 $184,111.98 $317,567.24 $744,985.92 $378,343.31?
A 7% annual coupon bond has a maturity of three years and a yield to maturity on an annual basis of 8%. For the next two years, interest rates stay at 8% and thereafter they change to 7%. Which of the following is closest to the amount of reinvestment income on the bond to its final maturity if the par value of the holding is $1,000. A. $15.04B. $15.79C. $16.55
A company is trying to issue a 15-year, BB-rated, semi-annual paying bond with 6% annual coupon rate. If the appropriate annual discount rate for the bond issuance is 3% and the current credit risk premium for BB-rated bond is 3.5%, what is the current market price of this bond? $952.55 $852.25 $1011.36 $1213.25
MCQ: Legacy Inc. recently issued bonds that mature in 10 years. They have a par value of $1,000 and annual coupon of 6%. The current market interest rate is 8.5%. Assume that the bonds can be recalled at end of year 5 at $1,250. What will be the price of bonds? Select one: a. 833.82 b. 1067.75 c. 1130.95 d. 835.97 e. 582.73
The Jupiter Dan Company has a bond outstanding that makes semiannual payments with a coupon rate of 10 percent. The bond sells for $1062.84 and matures in 10 years. The par value is $1,000. What is the yield to maturity (YTM) of the bond? O 18.59% O 8.43% 9.03% O 4.52% 18.06%
The Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 9.5% and that the coupon payments are to be made semannually.Assuming the appropriate YTM on the Sisyphean bond is 7.4%, then this bond will trede at A a premium. B. par c. a discount. D. none of the above
Ordinary bonds issued by PIMCO have a current quoted price of $830.50. The PIMCO bond has a 5.7% annual coupon rate. The YTM = 8.15% and the PIMCO bonds pays coupon twice per year. If the next coupon will be disbursed in exactly 6 months, the PIMCO bond will mature in: a. 5.19 years b. 29.14 years c. 19.96 years d. 20.77 years e. 10.39 years
Baghiben
A) BOND VALUATION: DeBond Industries has outstanding a $1,000 face-value bond with an8% coupon interest rate. The bond has 12 years remaining to its maturity date.a) If interest is paid annually, find the value of the bond when the required return is (1) 7%, (2)8%, and (3) 10%.b) Indicate for each case in part a whether the bond is selling at a discount, at a premium, or at itspar value.c) Using the 10% required return, find the bond’s value when interest is paid semiannually.B) AMORTIZATION: Suppose you borrow $1,200,000. You are going to repay the loan bymaking equal annual payments for five years. The interest rate on the loan is 12 percent per year.Prepare an amortization schedule for the loan. How much interest will you pay over the life of theloan? What fraction of the payment made at the end fourth year will represent repayment ofprincipal?
A corporate bond with a face (par) value of $10,000 will mature 7 years from today (it was issued 3 years ago). The bond just after the 6 th interest payment is being sold for $6950. The bond’s interest rate is 4% nominal annual, payable semiannually. The yield of the bond if held to maturity is in what range? (a) Less than 4% (b) Between 4 and 6% (c) Between 6 and 10% (d) Greater than 10%?
The Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this bond is 9.7% and that the coupon payments are to be made semiannually. Assuming that this bond trades for $1,010, then the YTM for this bond is closest to: A. 11.4% B. 7.6% C. 13.3% D. 9.5%

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