One year ago, Company A issued 15-year, noncallable, 6.9% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity? a. $1,134.26 b. $1,146.47 c. $1,140.53 d. $1,170.65 e. $1,178.62

One year ago, Company A issued 15-year, noncallable, 6.9% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity? a. $1,134.26 b. $1,146.47 c. $1,140.53 d. $1,170.65 e. $1,178.62

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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Grossnickle Corporation issued 20-year, noncallable, 7.4% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5-5%. What is the current price of the bonds, given that they now have 19 years to maturity? a. $1,281.57 b. $1,220.55 c. $1,196.13 d. $1,013.05 O e. $1,000.85
Two years ago, Company XYZ issued $100 million worth of ten-year bonds with a face value of $,000.00 and a coupon rate of 5%. Coupon payments are made semi-annually. Two years ago, the market yield-to-maturity was 3% p.a. Due to the increased insecurity facing the industry, the market yield to maturity is now 7% p.a. a) Determine the market price of the bonds at issue based on an appropriate model. b) Based on the yield-to-maturity today, assess whether the price has changed and proceed to determine its market price today. c) Compare the results in (a) and (b) above and interpret the sensitivity of bond prices to maturity and yield to maturity.
14. Hamilton Corporation's bonds will mature in 15 years. The bonds have a face value of $1,000 and an 8% coupon rate, paid semiannually. The price of the bonds is $1,111.14. What is the yield to maturity of the Hamilton bonds?
Weismann Company issued 15-year bonds a year ago at a coupon rate of 12 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 8 percent, what is the current bond price? Multiple Choice $593.35 $1,227.37 $1,670.52 $1,333.26 $ 1,343.26
AEP issued 20-year 7.4% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the price of the bonds today? $1,196.13 $1,220.55 $1,281.57 $1,000.85 $1,013.05
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
13. MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The parvalue of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on asemi-annual basis. Assuming there are no changes to interest rates during the course of theyear, what are the current yield and capital gains yield on the bonds for this year?
One year ago Lerner and Luckmann Co. issued 20-year, noncallable, 7.72% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.27%. What is the current price of the bonds, given that they now have 19 years to maturity? Group of answer choices $1,302.58 $1,225.20 $1,328.37 $1,289.68 $1,186.51
Wildhorse Corp. has 18-year bonds outstanding. These bonds, which pay interest semiannually, have a coupon rate of 9.875 percent and a yield to maturity of 6.0 percent. Assume face value is $1,000. Problem 8.30(a) Your answer is incorrect. Compute the current price of these bonds. (Round answer to 2 decimal places, e.g. 15.25.) Current price $ EA
Problem #3: There is a bond on a company's books with an original term of 10 years that was purchased for a premium at its issuance, just over 2 years ago. The bond pays semi-annual interest. With the receipt of the latest coupon, the corresponding amount for amortization of the premium was $297.14. Exactly one year ago, the amount for amortization of the premium was $285.60. Based on the relation between subsequent amounts for amortization of the principal, what was the original value of the premium? Problem #3: Answer correct to 2 decimals.
am. 74.
Grossnickle Corporation issued 20-year, noncallable, 7.2% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.6%. What is the current price of the bonds, given that they now have 19 years to maturity? a. $1,237.42 b. $1,184.25 c. $1,194.73 d. $1,230.68 e. $1,189.63

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