Problem 6-31 Bond Yields [LO 2]You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15,2022. The bonds have a par value of $2,000 and semiannual coupons.Company (Ticker)Xenon, Incorporated (XIC)Kenny Corporation (KCC)Williams Company (NICO)Coupon6.007.1827Yield to maturityMaturityJanuary 15, 2040January 15, 2034January 15, 2036%Last Price Last Yield94.25522776.1494.7956.96What is the yield to maturity for the bond issued by Xenon, Incorporated?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.Estimated$ Volume(000s)57,36848,94743,808

Bonds refer to instruments that are issued by companies to raise debt capital from their investors…

Problem 6-31 Bond Yields [LO 2] You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2.000 and semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (XCC) Williams Company (MICO) Coupon 6.00 7.18 77 Maturity January 15, 2040 January 15, 2034 January 15, 2036 % Last Price Last Yield 94.255 77 94.795 77 6.14 6.96 Estimated $ Volume (000) 57,368 48,947 43,808 What is the yield to maturity for the bond issued by Xenon, Incorporated? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16. Yield to maturity

Problem 6-31 Bond Yields [LO 2] You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2.000 and semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (XCC) Williams Company (MICO) Coupon 6.00 7.18 77 Maturity January 15, 2040 January 15, 2034 January 15, 2036 % Last Price Last Yield 94.255 77 94.795 77 6.14 6.96 Estimated $ Volume (000) 57,368 48,947 43,808 What is the yield to maturity for the bond issued by Xenon, Incorporated? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16. Yield to maturity

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 18-26 Make-Whole Call Premium (LO2, CFA5) Assume that Kendal Corp. has an outstanding bond issue with a par value of $1,000 and a current market price of $1,042.70 per bond. The bond has nine years remaining and a coupon rate of 6 percent. (Use Excel to answer this question. Enter your answer as a percent rounded to 2 decimal places.) a. Find the current yield to maturity for the Kendal Corp. bond. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Yield to maturity b. If the bond trades at a yield spread of 2.30 percent above comparable U.S. Treasury notes, what must the current yield on Treasury notes be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Treasury yield % % Make-whole yield Make-whole price c. If the Kendal bond has a make-whole call premium of 140 basis points above the U.S. Treasury rate, what is the make-whole call premium? (Do not round intermediate…
Problem 6-30 Coupon Rates [LO 2] You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 5.901 6.128 Maturity Month/Year May 29 May 34 May 44 Coupon rate Bid Asked 103.6249 103.5371 104.4861 104.6318 ?? ?? In the above table, find the Treasury bond that matures in May 2029. What is the coupon rate for this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Change Ask Yield +.3209 2.189 ?? +.4209 +.5314 3.891 %
Problem 6-28 Bond Yields [LO 2] You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 5.624 6.283 Maturity Month/Year May 30 May 33 May 39 Bid Asked. Change Ask Yield 103.4716 103.5444 +.3119 6.159 104.5056 104.6513 27 77 77 4.191 +4389 +5509 In the above table, find the Treasury bond that matures in May 2033. What is your yield to maturity if you buy this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Yield to maturity %
18. Xcel Using a Spreadsheet to Calculate Bond Values: What is the bond quote for a $1,000 face value bond with an 8 percent coupon rate (paid semiannually) and a required return of 7.5 percent if the bond is 6.48574, 8.47148, 10.519, and 14.87875 years from maturity? (LG 6-2) Face Value 100% 100 100 100 Periodic Coupon Payment 6.48574 × 2 = 12.97148%/2 = 4% Total Payments 8.47148 x 2 = 16.94296 10.519 x 2 = 21.0380 14.87875 x 2 = 29.7575 4 4 4 Required Return 7.5% 7.5 7.5 7.5 The Bond Value Will Be 102.531% 103.094 103.594 104.437
D & R A1 8 - 2 Question 8. Cheapest-to-Deliver Bond Today is July 1. You hold a November Treasury bond futures contract with a price of 92:15 (i.e., 92 plus [15/32]), with a delivery date of November 15 in the same year. You have identified the two bonds below that could be used for delivery against the futures contract: Bond A Bond B Maturity 26.5 years 31 years Coupon rate 5% 8.5% Asking price 93:2 144:13 Coupon dates April 15, October 15 June 15, December 15 Callable? No No Assume that the next year is not a leap year, and that the market repo rate is 5.50%. Identify the cheapest-to-deliver bond.
Question 22: A 10-year corporate bond has coupon rate equal to 5.5%. This bond has a par value equal to 100, pays annual coupons on November 17, and matures on November 17, 2033. Because of the credit risk associated with the payments of this bond, the market is discounting its cash flows using yields that are 3 percentage points higher than the yields required from credit- risk-free government bonds. As a result, this corporate bond has a yield to maturity equal to 6.711%. A. What is the price of the 10-year corporate bond? B. Using the first-order linear approximation, what would be the percentage change in the price of this 10-year corporate bond if its yield to maturity decreases by 0.5 percentage points?
Problem 29 You have until 9:00 PM to complete this assignment. Intro A corporate bond pays interest annually and has 3 years to maturity, a face value of $1,000 and a coupon rate of 3.8%. The bond's current price is $1,002.79. It is callable at a call price of $1,050 in one year. Part 1 What is the bond's yield to maturity? 4+ decimals Save Part 2 What is the bond's yield to call? 3+ decimals Save Attempt 1/1 Attempt 1/1
D & R A1 8 - 1 Question 8. Cheapest-to-Deliver Bond Today is July 1. You hold a November Treasury bond futures contract with a price of 92:15 (i.e., 92 plus [15/32]), with a delivery date of November 15 in the same year. You have identified the two bonds below that could be used for delivery against the futures contract: Bond A Bond B Maturity 26.5 years 31 years Coupon rate 5% 8.5% Asking price 93:2 144:13 Coupon dates April 15, October 15 June 15, December 15 Callable? No No Assume that the next year is not a leap year, and that the market repo rate is 5.50%. Find the conversion factors for Bond A and Bond B. Use the downloadable Excel spreadsheet on the Chicago Mercantile Exchange (CME) website: http://www.cmegroup.com/trading/interest-rates/us-treasury-futures-conversion-factor-lookup-tables.html.
Q 20 Calculate the price of a 5.7 percent coupon bond with 22 years left to maturity and a market interest rate of 6.5 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) BOND PRICE_______ Is this a discount or premium bond?multiple choice premium bond discount bond
11 3 N Pont You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2,000 and semiannual coupons. Company (ticker) Xenon, Incorporated (XIC) Kenny Corporation (KCC) Hilliams Company (HICO) Coupon 7.200 7.300 77 Coupon rate Maturity January 15, 2039 January 15, 2033 January 15, 2035 Last Price Last Yield. 94.399 77 94.915 ?? 6.38 7,20 Estimated S Volume (0000) 57,380 48,959 43,820 What is the coupon rate for the Williams Company bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.
Problem 6-28 Bond Yields [LO 2] You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 5.574 6.198 Maturity Month/Year May 29 May 32 May 38 Yield to maturity Bid Asked 103.4703 103.5431 104.5043 104.6500 ?? ?? Change +.3106 +.4377 +.5496 In the above table, find the Treasury bond that matures in May 2032. What is your yield to maturity if you buy this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. % Ask Yield 6.139 ?? 4.171
Activity 1 A company has a $1200 face value bond and three years to maturity. The bond carries an annual coupon of 8%. The current market price of the bond is $1050. Required: (i) (ii) (iii) What is the yield to maturity of the bond? Given a discount rate of 10%, what is the intrinsic value of the bond? Should the company hold the bond or sell it?

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