Round all dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percent rounded to one decimal place 38. Four years ago, Phutki Corp. issued a $1,000 par value, 11 percent (annual payment) coupon bond. At the time the bond was issued it had 25 years to maturity. Currently this bond is selling for $1,000 in the bond market. Phutki Corp. is now planning to issue a $1,000 par value bond with a coupon rate of 9 percent (semi- annual payments) that will mature 15 years from today. Assuming that the riskiness of the new bond is the same as the previous bond (i.e., the YTM on the new bond is equal to the current YTM on the previous bond), how much will investor's pay for this new bond?
Round
all dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percent
rounded to one decimal place
38. Four years ago, Phutki Corp. issued a $1,000 par value, 11 percent (annual payment) coupon bond. At the
time the bond was issued it had 25 years to maturity. Currently this bond is selling for $1,000 in the bond
market. Phutki Corp. is now planning to issue a $1,000 par
annual payments) that will mature 15 years from today. Assuming that the riskiness of the new bond is the
same as the previous bond (i.e., the YTM on the new bond is equal to the current YTM on the previous bond),
how much will investor's pay for this new bond?
39. Consider a Zerobond (i.e., a bond that pays no coupon payment, meaning that the coupon rate on the bond is
0%) with a par value of $1,000 that will mature exactly 20 years from today. The current YTM of this
Zerobond is 6.7%. Five (5) years ago, the YTM of the same Zerobond was 5.2%. Calculate the dollar price
increase/decrease (2 decimal places) within the last five (5) years. If the bond falls in price, enter your answer
on D2L as a negative value (i.e., put a minus sign before your number with no space between the minus sign
and the number). If the bond increases in price, record the dollar amount of the increase as a positive value
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
