(Please use Excel) Company A's bonds pay interest annually at $80, with a par/par value of $1,000. The bonds mature in 20 years. The market required yield to maturity on a comparable risk-bond is 8.5 percent. a) Calculate the value of the bond. b) What is the value of the bond when the market required yield to maturity on a comparable risk bond (i) increases to 12 percent or (ii) decreases to 7 percent? c) Interpret the findings in sections a and b.
(Please use Excel) Company A's bonds pay interest annually at $80, with a par/par value of $1,000. The bonds mature in 20 years. The market required yield to maturity on a comparable risk-bond is 8.5 percent. a) Calculate the value of the bond. b) What is the value of the bond when the market required yield to maturity on a comparable risk bond (i) increases to 12 percent or (ii) decreases to 7 percent? c) Interpret the findings in sections a and b.
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
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(Please use Excel) Company A's bonds pay interest annually at $80, with a par/par value of $1,000. The bonds mature in 20 years. The market required yield to maturity on a comparable risk-bond is 8.5 percent.
a) Calculate the
b) What is the value of the bond when the market required yield to maturity on a comparable risk bond (i) increases to 12 percent or (ii) decreases to 7 percent?
c) Interpret the findings in sections a and b.
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