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
Related questions
Question
Can I get the answers to 8.1 and 8.2.
Transcribed Image Text:8.1 Bond price: BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest
rate for similar bonds is currently 6 percent. Assuming annual payments, what is the value of the
bond?
8.2 Bond price: Pierre Dupont just received a cash gift from his grandfather. He plans to invest in
a five-year bond issued by Venice Corp. that pays an annual coupon rate of 5.5 percent. If the
current market rate is 7.25 percent, what is the maximum amount Pierre should be willing to pay
for this bond?
8.3 Bond price: Knight, Inc., has issued a three-year bond that pays a coupon rate of 6.10
percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80
percent, what is the market value of the bond?
8.4 Bond price: Regatta Inc. has seven-year bonds outstanding that pay a 12 percent coupon
rate. Investors buying these bonds today can expect to earn a yield to maturity of 8.875 percent.
What is the current value of these bonds? Assume annual coupon payments.
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