XYZ Corp decided to fund its expansion by issuing two rounds of $1.000 face valkue fxed coupon bonds. The first roundconsisted of 15-year maturity bonds issued 5 years ago with a coupon rate of 320%. Today, these bonds are tradjng at$942.94 resulting in a current yield of 3.39% and yield-to-maturity of 3.90%. What annual coupon payments should XYZCorp pay on the 10-year fixed coupon bonds it plans to issue today such that these new bonds could be issued at par?$39.00O 533 94O $32.00O $4150

The new 10-year bonds can be issued at the current rate expected by the market which is equal to the…

Answered: XYZ Corp decided to fund its expansion…

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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XYZ Corp decided to fund its expansion by issuing two rounds of $1.000 face value fixed coupon bonds. The first round consisted of 15-year maturity bonds issued 5 years ago with a coupon rate of 3.20%. Today, these bonds are tradjng at $942.94 resulting in a current yield of 3.39% and yield-to-maturity of 3.90%. What annual coupon payments should XYZ Corp pay on the 10-year fixed coupon bonds it plans to issue today such that these new bonds could be issued at par? O $39.00 O $33.94 $32.00 O $41.50
To help finance a major expansion, GAMA Company sold a bond with 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. What is the component cost of debt for use in the WACC calculation? Show work in excel and explain answer
GrowthSec Ltd has raised $10M in debt funding by issuing 100 5 year bonds with a face value of $100,000 each. The bonds pay semi-annual coupons at 6% p.a. If the yield to maturity is 7% p.a., what will be the price of each bond? If after one year the bond is trading at a premium, what must have happened to market interest rates? Why has this impacted the bond price?
Thermo-Tech Systems recently sold a $20 million bond issue with a 20-year maturity and a coupon rate of 7% compounded semiannually. The bond indenture contract requires Thermo-Tech to make equal payments at the end of every 6 months into a sinking fund, which should accumulate the full $20 million required to redeem the bonds at their maturity. (Round all values to nearest $). a. What should be the size of the sinking fund payments if the fund earns 4.5% compounded semiannually? b. How much will the fund earn in the sixth year?. How much will the fund increase in the 27th payment interval? d. What is the semiannual cost of the debt
Assets, Ic., plans to issue $6 million of bonds with a coupon rate of 11 percent, a par value of $1,000, semiannual coupons, and 15 years to maturity. The current market interest rate on these bonds is 8 percent. In one year, the interest rate on the bonds will be either 12 percent or 8 percent with equal probability. Assume investors are risk- neutral. a. If the bonds are noncallable, what is the price of the bonds today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price of the bonds b. If the bonds are callable one year from today at $1,060, will their price be greater or less than the price you computed in part (a)? O Greater O Lesser
AAA company plans to issue bonds to expand operations. The bonds will have a par value of $1,000, a 10-year maturity, and a coupon interest rate of 9%, paid semiannually. Current market conditions are such that the bonds will be sold to net $937.79. What is the yield-to-maturity of these bonds?
Assets, Incorporated, plans to issue $8 million of bonds with a coupon rate of 7.6 percent, a par value of $1,000, semiannual coupons, and 25 years to maturity. The current market interest rate on these bonds is 7.1 percent. In one year, the interest rate on the bonds will be either 9 percent or 4 percent with equal probability. Assume investors are risk-neutral. a.lf the bonds are noncallable, what is the price of the bonds today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.lf the bonds are callable one year from today at $1,040, will their price be greater or less than the price you computed in part (a)? multiple choice Greater Lesser
ABC Investors is interested in purchasing the bonds of the XYZ Company. ABC's bonds are currently priced at P1,100.00 and have 14 years to maturity. Is the bonds have a 6% coupon rate what is the yield-to-maturity of these annual coupon paying bonds?
Assets, Inc., plans to issue $8 million of bonds with a coupon rate of 7 percent, a par value of $1,000, semiannual coupons, and 15 years to maturity. The current market interest rate on these bonds is 10 percent. In one year, the interest rate on the bonds will be either 8 percent or 4 percent with equal probability. Assume investors are risk- neutral. a. If the bonds are noncallable, what is the price of the bonds today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Price of the bonds
Baghiben
Lowell Corporation recently issued 10-year bonds at a price of $1,000 with a 8 percent semi-annual coupon at par. Now it wishes to issue new 10 year bonds with 2 percent semi-annual coupon with a face value of $1,000. If both bonds have the same yield-to-maturity, how many new bonds must Lowell issue to raise $3,000,000 cash?
BANK ABC purchased a corporate bond with a coupon rate of 5.5% and a face value of $1000. It has 11 years to maturity and is currently selling in the market for $821.53. The bond makes annual coupon payments. BANK ABC is planning on selling this bond at the end of 5 years for $934.86 (ex-interest). What is the holding period yield (HPY) on this bond? 4.7% 5.5% 7% 8% 9% Give typing answer with explanation and conclusion

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