ork 8Kstion 2,Part 1 of 3Points: 0 of 4Determining values-Convertible bond Craig's Cake Company has an outstanding issue of 15-year convertible bonds with a $1,000 par value. These bonds are convertible into 85shares of common stock. They have a 11% annual coupon interest rate, whereas the interest rate on straight bonds of similar risk is 18%.a. Calculate the straight bond value of this bond.b. Calculate the conversion (or stock) value of the bond when the market price is $18 per share of common stock.c. What is the minimum market value of the bond?a. The straight value of the bond is $ (Round to the nearest cent.)

a. Calculate the straight bond value:The straight bond value is the present value of the bond's…

Answered: ork 8 K stion 2, Part 1 of 3 Points: 0…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter6: Bonds (debt) - Characteristics And Valuation

Section: Chapter Questions

Problem 5PROB

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Question 1: Two $900 par value bonds are bought to be redeemed at the end of the same period and to yield an annual nominal rate of 5% convertible semi-annually. The price of the first bond is $1027.63 and has a coupon rate of 6%. The second bond has a coupon rate of 3%. What is the price of the second bond? A) 644.74 B) 859.65 C) 429.83 D) 967.11 E) 322.37
Present value of bond
Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 8 percent interest annually and have 15 years until maturity. You can purchase the bond for $1,075. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? Question content area bottom Part 1 a. The yield to maturity on the Saleemi bonds is enter your response here%. (Round to two decimal places.) Part 2 b. You ▼ should should not purchase the bonds because your yield to maturity on the Saleemi bonds is ▼ greater less than the one on a comparable risk bond. (Select from the drop-down menus.)
Intro A corporate bond has 2 years to maturity, a coupon rate of 8%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 0.095. Part 1 What is the price of the bond (in $)? 977.44 Correct ✓ Attempt 1/10 for 10 pts. Since market interest rates (or yields or yield to maturity), are quoted as bond equivalent yields (a type of APR), we need to divide the quoted rate by 2: Period rate: 0.095 = 0.0475 2 The 6-monthly interest payment, or coupon, is: Coupon rate 0.08 Coupon = Face value= 2 21,000 = 40 Bond price: Coupon Par value Р T + r (1+r) (1+r)* 40 0.0475 1 1,000 4+ (1+0.0475) (1+0.0475) = 973.25 Part 2 What is the bond's duration? 2+ decima Submit Part 3 Attempt 2/10 for 9.5 pts. Attempt 1/10 for 10 pts. If yields fall by 0.8 percentage points, what is the new expected bond price based on its duration (in $)? 0+ decima Submit Part 4 Attempt 1/10 for 10 pts. What is the actual bond price after the change in yields (in $)? 0+ decima Submit…
(Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 12 percent interest annually and have 11 years until maturity. You can purchase the bond for $945. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 14 percent? Question content area bottom Part 1 a. The yield to maturity on the Saleemi bonds is enter your response here%. (Round to two decimal places.)
All parts or skip pls
Question 12: In the following, you are given 5 bonds. Suppose coupons of all bonds are paid semiannually, the bond principal 100 is paid at the bond maturity b) Calculate the duration for each bond Years to Maturity 0.5 1 1.5 2 2.5 Bond price 98 99 99 98 97 Coupon per year Spot rate Duration ? 5. 4)
7. Riverside Metals recently issued some debt that had an original maturity of nine months. This debt is best elassified as a(n): A. option contract. B. money market instrument. C. fixed-income security. D. derivative security. E. futures contract. Use the following bond quotes to answer this question: Issuer Name Alpha Industrial Beta Movers Coupon 5.875 Change +.008 May 2036 103.407 100.013 103.354 +.010 Maturity High Low Last 99.402 Apr 2010 99 823 98.667 7.120 8. What is the current price of a S1,000 face value Beta Movers' bond? A. S1,000,10 B. S1,000.13 C. SI,033.54 D. $1,033.64 E. S1,034.17 9. Which one of the following represents a residual ownership interest in the issuer? A. U.S. Treasury bond B. corporate bond C. municipal bond D. preferred stock E. common stock Use these option quotes to answer this question: Chg Bid Ask Vol Open Int Strike Symbol Last 47.50 JLHW.X 6.00 to.25 5.90 6.10 18 12 50.00 JLHJ.X 4.75 t0.30 4.80 5.00 17 14 10. The price you will pay (per underlying…
3) Answer the below questions for bonds A and B. Bond A 8% 8% 2$100.00 $100.00 $100.00 $104.055 CouponYield to maturity Maturity (years) ParPrice Bond B 9% 8% (a) Calculate the actual price of the bonds for a 100-basis-point (1% annual) increase in interest rates. (b) Using (modified) duration, estimate the price of the bonds for a 100-basis- 5 point (1% annual) increase in interest rates.(c) Explain why your answers in parts (a) and (b) differ.
5. Chapter MC, Section 87, Problem 087 Algo Moerdyk Corporation's bonds have a 15-year maturity, a 10.15% semiannual coupon, and a par value of $1,000. The going interest rate (ra) is 7.90%, based on semiannual compounding. What is the band's price? a. $1,193.77 b. $1,195.72 c. $1,262.83 d. $1,230.60 e. $1,125.52
2. Characteristics of bonds C. If the coupon interest rate is 4.375% for the first six months and changes to a rate equal to the 10-year Treasury bond rate plus 1.3% thereafter, the bond is called a bond. D. Which feature of a bond contract allows the issuer to redeem a bond issue immediately in its entirety at an amount greater than par value prior to maturity? Put provision Deferred call provision Call provision Convertible provision E. When are issuers more likely to call an outstanding bond issue? When interest rates are higher than they were when the bonds were issued When interest rates are lower than they were when the bonds were issued

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