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Bond Valuation

Corporate bonds

A 10-year corporate bond is issued with a face value of $100,000, paying interest of $2,500. semi-annually. If market yields decrease shortly after the T-bond is issued, what happens to the bond's: a. price? b. coupon rate? c. yield to maturity?

Bond values

A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar debt obligations are now 8 percent. a. What is the current price of the bond? b. Assume Ms. Russell bought the bond three years ago, when it had a price of $1,070. W

Bond valuation: Yield to maturity, Yield to call

Company A issued zero coupon bonds 5 years ago at a price of $200 per bond. The bond has a par value of $1000 and a 20 year maturity when they were isued. The bonds were callable 10 years after the issue date at a price 7 percent over their accrued value on the call date. If the bonds sell for $225 in the market today what is t

A level coupon bond:

A level coupon bond: A) is typically a debenture. B) has the same rate as its yield to maturity. C) is an annuity over the life of the bond. D) is a zero coupon annuity. E) C) and D).

Bond's yield

True or False If a bond's yield does not change over its life, then the size of the discount or premium will increase as its life shortens.


(See attached file for full problem description with data table) --- Using the table above solve the following: a. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 5-year, a 15-year, and a 30-year time

Calculation of the yield to maturity for bonds

I'm trying to understand a formula in a CPA review book for the calculation of the yield to maturity for bonds. The formula is as follows: YM = Annual interest payment + Principal Payment -Bond Price / Number of years to maturity / 0.6 (Price of bond) + 0.4 (Principal payment) The factors 0.6 and 0.4 are some type of

Bond Value : Solution set

$1,000 par value bond outstanding that pays 9 percent annual interest. The current yield to maturity on such bonds in the market is 12 percent. Compute the price of the bonds for these maturity dates: 30 years 15 years 1 year

Determining whether a bond is overpriced

Please help with the following problem. Cost of a bond: His broker quoted a price of $1,180. Jim is concerned that the bond might be overpriced based on the facts involved. The $1,000 par value bond pays 14 percent interest, and it has 25 years remaining until maturity. The current yield to maturity on similar bonds is 1

Security Analysis in Practice

You have been asked to give a speech about "Security Analysis in Practice" to a group of industry professionals. In your speech you are to address the following: 1. The most common theoretical underpinnings of the models used by practitioners, and 2. The types of practical adjustments financial analysts might consider i


If the company were to issue 10-year bonds with a face value of $100,000 and the market rate of interest is 10%, what would the proceeds from the sale if the bonds were zero-interest bonds? What would be the proceeds if the annual interest payments did not begin for 5 years and the stated rate of interest were 10%? What

Pure Bond Value, Conversion Value Etc.

13.) Pittsburgh Steel Company has a convertible bond outstanding, trading in the marketplace at $930. The par value is $1,000, the coupon rate is 8 percent, and the bond matures in 25 years. The conversion price is $50 and the company's common stock is selling for $44 per share. Interest is paid semiannually. a. What is the c

Finance Scenario's 3

7.) Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 9 percent and interest is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 15 years to maturity. Compute the price of the bonds based on semiannua

Cost problems

2.) Sullivan Cement Company can issue debt yielding 13 percent. The company is paying a 36 percent rate. What is the after-tax cost of debt? 6.) Addison Glass Company has a $1,000 par value bond outstanding with 25 years to maturity. The bond carries an annual interest payment of $88 and is currently selling for $925. Addison

Financial management corporate bonds

A 5-year corporate bond has an 8 percent yield. A 10-year corporate bond has a 9 percent yield. The two bonds have the same default risk premium and liquidity premium. The real risk-free rate, r*, is expected to remain constant at 3 percent. Inflation is expected to be 3 percent a year for the next five years. After five ye

Important information about Bond and Stock Valuation

Midland Oil has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is: a. 7 percent. b. 10 percent. c. 13 percent. Harrison Ford Auto Company has a $1,000 par value bond outstanding that pays 11 percent int

Financial management/current price per share

In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures to a market value basis. KJM Corporation's balance sheet as of today, January 1, 2004, is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock


1. What are the key features of a bond? 2. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky? 3. How is the value of any asset whose value is based on expected future cash flows determined? 4. What is the yield to maturity on a 10-year, 9% annual coupon, $1,000

Bonds and Yield Related Questions

Can you please assist me with theses questions? 3. A bond has a coupon rate of 8.5% and 18 years until maturity. If the yield to maturity is 6.7%, what is the price of the bond? 5. A bond sells for $864.50 and has a coupon rate of 6%. If the bond has 16 years until maturity, what is the yield to maturity of the bond? 8

Calculate yield to maturity

I need help with this practice problem. I am going to have something very similar on an exam and can't figure out how to solve it. Bonds of Zello Corporation with a par value of $1,000 sell for $960, mature in 5 years, and have a 7% annual coupon rate paid semiannually. Calculate: a. Current yield. b. Yield to maturity (t


Midland Oil has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is: a. 7 percent. b. 10 percent. c. 13 percent. Harrison Ford Auto Company has a $1,000 par value bond outstanding that pays 11 percent inte

Canadian Pacific Limited's debentures: determine YTM

Recently the high and low market prices of Canadian Pacific Limited's debentures (4 %) were $790 and $475 respectively. Determine the yield-to-maturity of one of these debentures if it was purchased under the following conditions: a. at the high market price b. at the low market price

Treasury Bond

Lester purchases a 30-year Treasury bond today. This bond is selling at par ($1,000) and has a coupon rate and yield to maturity of 7% (the bond pays interest annually). Now suppose that next week, a number of economic events occur which raises the rate of inflation. As a result the market rate of interest rises from 7% to 8%


You buy a 10% coupon bond 1 year ago for $1,060 it has a 1,000 face value and this bond sells for $1,085 today. 1. what is your total dollar return on this investment over the past year? 2. what is the total nominal rate of return over the past year? 3. if the inflation rate last year was 9%, what is your total rea

Bond yields

12% coupon bonds, with 5 yrs left to maturity, bonds make annual payments, if the bond currentyly sells for $1,107.93 what is the YTM? so i did: 12%=$120 every year for 5 years 1,107.93=$120 x [ 1-1 / (1+r)5] /r +1000/(1+r)5 ( the five is an exponent ) yet i do not know how to find the rate of return to finish up

Coupon Bond

What is the value of a 20-year, 7% annual coupon bond if Kd equals 9%? What is the value if inflation increases 3%? What is the value if inflation decreases 3%? Show formulas and entries on a financial calculator.

Finance Questions

1. You are considering an investment in the bonds of a company. The bonds which pay interest semiannunally, will mature in 8 8years and have coupon rates of 9.5%. Currently the bonds are selling for $872. a) If your require rate of return is 11% for bond in the risk class, what is the highest price you would be willing to