Problem 1 Dundee Inc. bonds are currently selling for $1,250. They pay an annual coupon of $90, have a maturity of 25 years and a face value of $1,000, but can be redeemed in 5 years at $1,050. What is the difference between the YTM of this bond and its YTC? Problem 2 Gross Nickle Corporation issued 20-year 7.5% annual coupon bonds at $1,000 face value a year ago. Today, the YTM of these bonds is 5.5%. What is the current price of the bonds?

Problem 1 Dundee Inc. bonds are currently selling for $1,250. They pay an annual coupon of $90, have a maturity of 25 years and a face value of $1,000, but can be redeemed in 5 years at $1,050. What is the difference between the YTM of this bond and its YTC? Problem 2 Gross Nickle Corporation issued 20-year 7.5% annual coupon bonds at $1,000 face value a year ago. Today, the YTM of these bonds is 5.5%. What is the current price of the bonds?

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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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 $158.85. Exactly one year ago, the amount for amortization of the premium was $146.02. Based on the relation between subsequent amounts for amortization of the principal, what was the original value of the premium?
Ordinary bonds issued by Invesco yield 4.775% and mature in 9 years. If these Invesco bonds pay an annual 8.75% coupon, they are now worth: a. $628.21 b. $1,358.34 c. $971.28 d. $1,285.39 e. $971.04
LO4 The company intends to issue 20-year bonds with a face value of $1,000. The bonds carry a coupon rate of 9%, and interest is paid semiannually. On the issue date, the market interest rate for bonds issued by companies with similar risk is 12% compounded semiannually. Compute the market price of one bond on the date of issue.
.14.. Fly Adventures issues bonds due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. What is the issue price of the bonds? A. $537,194. B. $464,469. C. $538,973. D. $500,000. PV 1 2.5% 20pds .61027 PV 13% 10pds .74409 PVA 2.5% 20pds 15.56816 PVA 3% 20pds 14.87747
Problem 3: Straight Bonds ABC Corporation plans to issue a 9%, 10-year, P5,000,000 face value bonds. It will incur P500,000 as underwriting fee. What is the cost of the bond based on the following methods?1. Yield-to-maturity formula 2. Trial and error method (closest percent, 3 decimal places)
QUESTION 1 MaNga Inc. bonds have a current market price of $1,128.87 the bonds have an 9% annual coupon payment, a $1,000 face value, and 12 years left until maturity. The bonds may be called in 3 years at $1,125. What yield might investors expect to eam on these bonds? @7% 4.42% 7.16% 4.33%
A2
Question 6 Municipal bonds were issued with a face value of $100,000 and a coupon rate of 0.15% per quarter, and coupon payments are quarterly. This bond is bought in the bond market before maturation, and there are only 14 payments remaining. The first coupon payment of this bond is due today and the next payment is due after three months (one quarter), which you will be entitled to receive if you buy this bond now. What is the maximum amount you should pay for this bond today? As an investor, you wish to earn 2.5% compounded daily. Consider first calculating the quarterly effective interest rate for this investor. The coupon rate can be used to calculate recurrent revenues from this bond which will be coupon rate times its face value. *Assume that a quarter is 90 days
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.
Sir please help me sir urgently
One hungred $1,000 bonds having a bond rate of 8% per year payabie quarterly are purchased for $98,000, kept for 7 years, and sold for $95,000. Determine the "effective" annual yield rate on the bond investment. A. 11.50% В. 9.17% С. 8.87% D. 2.22%
Question Z Megan's Automotive Repair has 24,600 bonds outstanding, . The bonds pay a 9.80 percent semiannual coupon, mature in 12 years, and currently sell at 97 percent of par. Calculate the company's required return on debt.

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