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# Bond Valuation

### Bonds Payable - callable (Riley Co.)

Riley Co. has outstanding \$40 million face amount of 15% bonds that were issued on January 1, 1997, for \$39,000,000. The 20-year bonds mature on December 31, 2016, and are callable at 102 (that is, they can be paid off at any time by paying the bondholders 102% of the face amount). Required: a. Under what circumstances wou

### Net Present Value Investments

Which is the better investment assuming they have equal risks: a zero coupon bond with an initial price of \$10,000 and a face value of \$20,000 and an interest rate of 10%, or a coupon bond currently trading for \$14,000 with an interest rate of 5% paid semiannually and a face value of \$15,000. Both are 10 year bonds. Show how y

### Finance

Please complete problems posted on word document provided. Thank you. Chapter 5: A5. (Yield to maturity) Marstel Industries has a 9.2% bond maturing in 15 years. What is the yield to maturity if the current market price of the bond is a. \$1,120 b. \$1000 c. \$785? B13. (Expected dividend growth rate) Suppose MTA is expected

### Bond Valuation: Given the facts, what is the fair value of this bond?

A \$1000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bonds rate is 7.4%. What is the fair value.

### Zero coupon Bond: Calculate the YTM (yield to maturity)

Consider a zero-coupon bond with a \$1000 face value and 10 years left until maturity. If the bond is currently trading for \$459, what is the yield to maturity on this bond? Show calculations. Please show all calculations with explanation in excel or word.

### Mini Case to analyze debt structure

See attached file. Interest Rates, Bond Yields, and Duration CONCEPTS IN THIS CASE simple loans fixed-payment loans coupon bonds present value yield-to-maturity

### Bear Corporation issued 20 year bond 5 years ago.

Bear Corporation issued 20 year bond 5 years ago. The bonds have a contract rate of 12 percent with interest paid semiannually and a par value of \$1,000. If you require a return of 14 percent on these bonds, how much would you pay for one these bonds today?

### Studying yields from two different bond portfolios

A \$100,000 bond portfolio generates exactly \$9,000 per year in income. Another \$100,000 portfolio currently yields \$7,000 per year in income, but this amount is expected to grow at 4 percent annually. In about how many years will the two portfolios yield equal amounts?

### Zero-Coupon Bond Pricing

Assume that you require a 14 percent return on a zero-coupon bond with a par value of \$1,000 and six years to maturity. What is the price you should be willing to pay for this bond? Please explain as simply as possible so that I may understand better.

### Current yield on maturity on a bond

A bond has a \$1,000 face value and a \$989 market value. The bond pays interest semi-annually, has a yield-to-maturity of 7.47 percent, and matures in 12 years. What is the current yield? a. 6.67 percent b. 7.41 percent c. 7.47 percent d. 8.01 percent

### Current yield to maturity on a bond

A bond has a \$1,000 face value and a \$989 market value. The bond pays interest semi-annually, has a yield-to-maturity of 7.47 percent, and matures in 12 years. What is the current yield? a. 6.67 percent b. 7.41 percent c. 7.47 percent d. 8.01 percent

### Finance: Calculate YTM percent, coupon rate, current bond price, treasury bond yield

The Timberlake-Jackson Wardrobe Co. has 10 percent coupon bonds on the market with 20 years left to maturity. The bonds make annual payments. If the bond currently sells for \$996.6, the YTM is percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.) Merton Enterprises has bonds on the

### Finance: Calculate bond coupon rate, yield, YTM, accrued interest, treasury bond yield

See attached file for clarity. Young Corporation has bonds on the market with 19 years to maturity, a YTM of 6.4 percent, and a current price of \$1,519. The bonds make semiannual payments. The coupon rate on these bonds must be percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.)

### ABC Computer: value of bond purchased today

The ABC Computer Company has an outstanding issue of bond with a par value of \$1000, paying 12% coupon rate semi-annually. The bond was issued 25 years ago and has 5 years to maturity. What is the value of the bond assuming 14% rate of interest if you plan on purchasing the bond today?

### Finance problems: Bond valuation, NPV

Please help with the following finance-related problems. You are asked to appraise the bonds of Galardi & Griffin Corporation. The \$1,000 par value bonds have a stated annual interest rate of 13 percent, and interest is paid semiannually. Based on current market conditions, the yield to maturity of the bonds is 12% per yea

### An insurance company purchased bonds issued by XYZ Company two years ago...

An insurance company purchased bonds issued by XYZ Company two years ago. Today, XYZ Company has begun to issue junk bonds and is using the funds to repurchase most of its existing stock. Why might the market value of those bonds held by the insurance company be affected by this action? Please answer directly and in simple te

### Finance: Bond valuation, YTM, beta, Portfolio Required Return, DPS, constant growth

Please see attached file for problems. Week 3 Problem Set Solutions 5-1: Bond Valuation with Annual Payments. Jackson Corporations bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a \$ 1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is

### Finance: Bond yields, coupon rates, bond prices, real rates of return, treasury quotes

See the attachments.

### What will be the initial dilution in earnings per share if the new stock is issued? What was the yield to maturity on the bond at the time of issue? If the firm distributes 40% of its earnings, what are its earnings?

1) The Tims Corporation expects earnings of \$8,000,000 in the current year on 6,000,000 shares of common stock. The company is considering the effects on expected earnings of issuing an additional 2,000,000 shares of common stock. (a)  What will be the initial dilution in earnings per share if the new stock is issued? (b

### If the pure expectations hypothesis holds, what does the market expect that the one-year rate will be one year from now?

____ 9. If the pure expectations hypothesis holds, what does the market expect that the one-year rate will be one year from now? a. 6.0% b. 5.5% c. 6.5% d. 5.0% e. 7.0% Burlees Inc.'s CFO has collected the following information to calculate its WACC: ? The company's capital structure consists of 40% debt and 60%

### Need help

2. Which of the following statements is CORRECT? a. Yield curves must be either upward or downward sloping&#61485;they cannot first rise and then decline. b. If the pure expectations theory is correct, a downward sloping yield curve indicates that interest rates are expected to decline in the future. c. Downward sloping yield

### Bond Yields and Valuation: Compute effective annual yield; coupon rate for new bonds

1. Bond yields: Stealers Wheel Software has 8.4 percent coupon bonds on the market with nine years to maturity. The bonds make semiannual payment and currently sell for 104 percent of par. What is the current yield on the bonds? The YTM? The effective annual yield? 2. Bond Yields: Petty Co wants to issue new 20-year bonds for

### Convertible bonds: YTM at issue and ROR

Please help with the following problem. A company issued \$20 million of 15-year convertible bonds in October of 2003. At the time, market interest rates for straight bonds of similar quality were 6.4%. The company's convertible bonds had a coupon rate of 4% and sold for \$1,120 when issued. The bond paid semi-annual interes

### Yield to call, Yield to maturity

A company has an 6.5% coupon bond outstanding. The bond matures exactly 15 years from today and has a \$1,000 face value. Yesterday, October 22, 2009, the company paid its semi-annual interest payment (The bond pays semi-annual interest). The next interest payment will be paid exactly 6 months from today. Today, October 23, 200

### Continuous compounding, FV, multiple cash flows, stock valuation

10. Continuous Compounding Compute the future value of \$1,000 continuously compounded for a. 5 years at a stated annual interest rate of 12 percent. b. 3 years at a stated annual interest rate of 10 percent. c. 10 years at a stated annual interest rate of 5 percent. d. 8 years at a stated annual interest rate of 7 percent.

### Zero Coupon Bonds: Calculating Price, Interest, and Value

1) You purchased a zero-coupon bond that has a face value of \$1,000, five years to maturity and a yield to maturity of 7.3%. It is one year later and similar bonds are offering a yield to maturity of 8.1%. You will sell the bond now. You have a tax rate of 40% on regular income and 15% on capital gains. Calculate the following f

### Yield to Maturity and the Yield to Call

Please help with the given problem: It is now January 1, 2009, and you are considering the purchase of an outstanding RDC bond that was issued on January 1, 2007. The bond has a 9.5% annual coupon and a 30 year original maturity (it matures in December 31, 2036). There is a 5 year call protection (until December 31, 20011), a

### Pierre Imports Liquidation: Priority for bondholders, creditors, shareholders

See attached file.

### Portfolio Valuation: Risk Free Rate, Market Premium and Yield

Portfolio Valuation You have inherited a portfolio of stocks and bonds from your favorite uncle. However, a codicil in the will requires you to be able to price the portfolio under different economic conditions before you can take possession of it. Come to think of it, this guy was never your favorite uncle. You can prove you

### Coupons, Lottery and Debt

1. A 30-year zero-coupon that yields 12% percent is issued with a \$1000 par value. What is the issuance price of the bond (round to the nearest dollar)? 2. Rita won a \$60 million lottery. She is to receive \$1 million a year for the next 50 years plus an additional lump sum of \$10 million after the 50th year. The discount r