Purchase Solution

Call price of bonds

Not what you're looking for?

Ask Custom Question

Kennedy Gas Works has bonds which mature in 10 years, and have a face value of $1,000. The bonds have a 10 percent quarterly coupon (i.e., the nominal coupon rate is 10 percent). The bonds may be called in five years. The bonds have a nominal yield to maturity of 8 percent and a yield to call of 7.5 percent. What is the call price on the bonds?

Purchase this Solution
Solution Summary

The Call price of bonds has been calculated.

Solution Preview

Kennedy Gas Works has bonds which mature in 10 years, and have a face value of $1,000. The bonds have a 10 percent quarterly coupon (i.e., the nominal coupon rate is 10 percent). The bonds may be called in five years. The bonds have a nominal yield to maturity of 8 percent and a yield to call of 7.5 percent. What is the call price on the bonds?

To calculate the price of the bond we need to calculate / read from tables the values of
PVIF= Present Value Interest Factor
PVIFA= Present Value Interest Factor for an Annuity
Price of bond= PVIF * Par value of the ...

Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Motivation

This tests some key elements of major motivation theories.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

View More Free Quizzes
Related BrainMass Solutions

  • Price of a bond with call provision

    115697 Price of a bond with call provision Zabberer Corp bonds pay coupon rate of 12% annual interest and maturity value of $1000. Bonds are scheduled to mature at end of 14 years.

  • Bonds- Rate of Return, Price at different time periods

    Rate of Return, Price at different time periods for Bonds.

  • Yield to Maturity (YTM) and Yield to Call (YTC)

    However, Rourke may call the bonds in 8 years at a call price of $1,060. What are the YTM and YTC on Rourke's bonds?

  • Sharply Fallen Interest Rates

    bonds Typically will trade at no more than the call price, since call becomes likely at that point Putable Bonds contain a "put provision": Investors may resell the bonds back to the issuer prior to maturity at the put (exercise) price, often

  • Yield to Call and Realized Rates of Return

    The bonds originally were sold at their face value of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price.

  • Finding Call Period for Bond

    224515 Finding Call Period for Bond Mattco has 9% annual coupon, $1,000 face value bonds outstanding that mature in 10 years. However, the bonds can be called before maturity at a call price of $1,050.

  • Bond and current stock price

    $36 This solution is comprised of a detailed explanation to compute bonds price, current yield, yield to call, and stock price.

  • Conversion of Convertible Bonds

    9415 Conversion of convertible bonds Successful forced conversion of convertible bonds through a call requires that a. call price exceed par value b. conversion value exceed call price c.

  • Calculating YTC and YTM

    Current Price=1030 Call Price=104% of $1000=1040 Number of coupon payment left for call=3 Coupon payment=9% of $1000= 90 Let us see cash flows from now Year Cash flow 0 -1030 1 90 2 90

View More Related Solutions