Uliana Company wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 9 percent coupon bonds on the market that sell for $1,130, make semiannual payments, have a par value of $1,000, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Coupon rate %

Uliana Company wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 9 percent coupon bonds on the market that sell for $1,130, make semiannual payments, have a par value of $1,000, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Coupon rate %

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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Your answer is correct. Cullumber, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 7.5 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 6.0 percent, how much will Cullumber pay to buy back its current outstanding bonds? Assume face value is $1,000. (Round answer to 2 decimal places, e.g. 15.25.) Cullumber will pay +A $ 1084.72
Uliana Company wants to issue new 19-year bonds for some much-needed expansion projects. The company currently has 10.3 percent coupon bonds on the market that sell for $1,143, make semiannual payments, have a par value of $1,000, and mature in 19 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct.
Bobcaygeon Industries has decided to borrow money by issuing perpetual bonds with a coupon rate of 6.3 percent, payable annually. The one-year interest rate is 6.3 percent. Next year, there is a 36 percent probability that interest rates will increase to 8.3 percent, and there is a 64 percent probability that they will fall to 4.3 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What will the market value of these bonds be if they are non-callable? (Omit $ sign in your response.) Price of the bond $ b. If the company instead decides to make the bonds callable in one year, what coupon will be demanded by the bondholders for the bonds to sell at par? Assume that the bonds will be called if interest rates fall and that the call premium is equal to the annual coupon. Coupon rate c. What will be the value of the call provision to the company? (Omit $ sign in your response.) Call provision value %
(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 23 years with an annual coupon rate of 12 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 10 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 11 percent. What will be the price of these bonds if they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be $ (Round to the nearest cent.)
Atlantis Fisheries issues zero coupon bonds on the market at a price of $449 per bond. If these bonds are callable in 8 years at a call price of $502, what is their yield to call? (Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Yield to call
Uliana Company wants to issue new 16-year bonds for some much-needed expansion projects. The company currently has 8 percent coupon bonds on the market that sell for $1,065, make semiannual payments, and mature in 16 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Please solve with financial calculator or HP 10b and show inputs. Please don't use excel.
(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 19 years with an annual coupon rate of 6 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 7 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 8 percent. What will be the price of these bonds if they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be $ (Round to the nearest cent.)
(Related to Checkpoint 9.3) (Bond valuation) Pybus, Inc. is considering issuing bonds that will mature in 22 years with an annual coupon rate of 7 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 10 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 11 percent. What will be the price of these bonds if they receive either an A or a AA rating? a. The price of the Pybus bonds if they receive a AA rating will be $ 735.06. (Round to the nearest cent.) b. The price of the Pybus bonds if they receive an A rating will be $ (Round to the nearest cent.)
Imagination Dragons Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 20-year zero coupon bonds with a par value of $1,000 each to raise the money. The required return on the bonds will be 8 percent. Assume semiannual compounding periods. a. What will these bonds sell for at issuance? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Using the IRS amortization rule, what interest deduction can the company take on these bonds in the first year? In the last year? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Repeat part (b) using the straight-line method for the interest deduction. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. b. C. Issue price First year interest deduction Last year interest deduction Interest deduction $ $ 208.29 39.58
An insurance company is analyzing the following three bonds, each with five years to maturity, annual interest payments, and is using duration as its measure of interest rate risk. What is the duration of each of the three bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. $10,000 par value, coupon rate=9.7%, r 0.17 b. $10,000 par value, coupon rate 11.7%, r= 0.17 c. $10,000 par value, coupon rate = 13.7%, p=0.17 Duration of the bond years
Uliana Company wants to issue new 15-year bonds for some much-needed expansion projects. The company currently has 7 percent coupon bonds on the market that sell for $1,060, have a par value of $1,000, make semiannual payments, and mature in 15 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Coupon rate %
I’m having trouble with the PV function, could I have help please

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