The Metchosin Corporation has twodifferent bonds currentlyoutstanding. Bond M has a facevalue of $30,000 and matures in 20years. The bond makes no paymentsfor the first six years, then pays$1,400 every six months over thesubsequent eight years, and finallypays $1,700 every six months overthe last six years. Bond N also has aface value of $30,000 and a maturityof 20 years; it makes no couponpayments over the life of the bond.The required return on both thesebonds is 10% compoundedsemiannually, what is the currentprice of bond M and bond N? (Donot round intermediatecalculations. Round the finalanswers to 2 decimal places.)Bond MBond NCurrent Price$LA

Bonds are debt instruments issued by companies. The issuing company pays periodic coupons or…

Answered: The Metchosin Corporation has two…

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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USD has 6.5 percent coupon bonds outstanding with a current market price of $832. The yield to maturity is 16.28 percent and the face value is $1,000. Interest is paid semiannually. How many years is it until these bonds mature? PLEASE DO NOT DO IT ON EXCELL
ABC Company issued a $250,000 bond at the coupon rate of 2 percent payable semi-annually. Now, the bond has a remaining life of 4 years. i. Two years from now, you bought the ABC bond when the market interest rate for a new ABC bond is 4 percent. How much did you pay for the bond? ii. You sold the bond purchased in part i. after holding it for a year, when interest rates (for bonds of similar risk as ABC's bonds) fell to 3 percent. What is the percentage gain / loss on the bond? Illustrate your answer using the bond valuation equation.
ABC's semiannual bond has a clean price of $1013. It paid its last coupon of $50 65 days ago. Calculate the accrued interest on the bond. Assume a 180-day semiannual period. Round to the nearest dollar. Don't include the dollar sign in your answer.
Similar to the mortgage pass-through security (PT), a competing bond has a par value of $100,000, a 4% coupon paid monthly, and a maturity of 258 months. Like most bonds, the payments on this bond are interest only. The current market rate for similar bonds is 3.5%, and prepayments on the mortgage pass through currently equal $100 per month. Assume rates immediately drop to 3%, and prepayments increase to $150 on the mortgage pass through as a result. What is the price of the bond today? Multiple Choice $87,347 $119,766 $115,830 O $100.017
Texas Corporation has a level-coupon bond with a 9% coupon rate and is paid annually. The bond has 20 years to maturitu and face value of RM1,000; similar bonds currently yield 7%. By prior agreement the company will skip the coupon interest payments in years 8,9, and 10. These payment will be repaid, without interest at maturity. Calculat the bond's current value.
JKL Co. issues zero coupon bonds on the market at a price of $338 per bond. Each bond has a face value of $1,000 payable at maturity in 13 years. What is the yield to maturity for these bonds (in percent)?
McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 10% coupon paid semiannually (5% each 6 months), and those bonds sell at their par value. McCurdy's Class P bonds have the same risk, maturity, and par value, but the p bonds pay a 10% annual coupon. Neither bond is callable. At what price should the annual payment bond sell? Select the correct answer. Oa. $992.23 b. $989.21 O c. $986.19 Od. $980.15 e. $983.17
ART Vandelay Inc. has two different bonds currently outstanding. Bond A has a face value of $40,000 and matures in 20 years. The bond makes no payment for the first 6 years, pays $2000 semiannually for the subsequent eight years, and finally $2500 semiannually for the last 6 years. Bond B also has a value of $40,000 and matures in 20 years. However, it makes no coupon payments over the life of the bond. If the stated annual interest rate is 12%, compounded semiannually, a. What is the current price of Bond A? b. What is the current price of Bond B?
One year ago Quantum of Solace Inc. issued 14-year bonds. Here's what's known about these bonds: • The coupon rate for these bonds is 7.4 %. • The coupon payments are semiannual. • The bonds' par value is $1,000. • The yield to maturity is 5.7%. How much should each of the bonds of Quantum of Solace Inc. cost if purchased today? (Do not round intermediate calculations. Round your final answer to 2 decimal places, e.g., 32.16.) Current bond price
Kebt Corporation's Class Semi bonds have a 15-year maturity and a 7.25% coupon paid semiannually (3.625% each 6 months), and those bonds sell at their $1,000 par value. The firm's Class Ann bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell? Do not round your intermediate calculations. a. $988.31 b. $1,000.00 c. $1,035.90 d. $678.87 e. $992.53
The Chauncey Corporation currently has a bond outstanding with a coupon rate of 6 percent and annual payments. The bond is currently selling for $983.04. The bond matures in 11 years and has a par value is $1,000. What is the yield to maturity (YTM) of The Chauncey Company's bonds? a)3.11% b)12.29% c)6.37% d)None of these options are correct e) 6.22%

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