An investor purchases a $1,000 par value bond that pays $60 interest each six-month period and has 8 years to maturity. The investor plans to hold the bond for 5 years and sell it in the market. The current required rate of return in the market is 14%, but is expected to drop to just 10% at the time of the sale due to projected falling interest rates. The price the investor is willing to pay for this bind is what?
... Conversion ratio = Number of shares that the bond can be converted into= 27 Current bond price= $1,040.00 Therefore, value of common stock based on the market ...
... a. Find the net proceeds from the sale of each bond for Warren Industries. Selling price $1,010 Flotation costs $30 Net proceeds $980 =1,010 - 30. ...
... Calculation of bond price: Interest payment per period= $80.00 No of Periods =n= 5 =1 x 5 Discount rate per period = r = 8.00% =8.%/1 PVIF (5 periods, 8.% rate ...
... In practice it is the reverse. Current Price of the bond is known. ... Thus the call provision increases the risk of a bond and the price should reflect this. ...
...Price of bond Coupon rate= 8% Face value= $1,000 n= 20 periods =10x2 (since semiannual payments) r= 5.00% per period =10%/2 (since semiannual payments). ...
... What is the bond's price? $1063.09. $1090.35. ... If a bond's yield to maturity exceeds its coupon rate, the bond's price must be less than its maturity value. ...
