Share
Explore BrainMass

Bond Valuation

Corporate bond

A corporate bond has a face value of $1,000, and pays a $50 coupon every six months (i.e., the bond has a 10 percent semiannual coupon). The bond matures in 12 years and sells at a price of $1,080. What is the bond's nominal yield to maturity

Category of Mutual Funds

1. What category of mutual fund invests in stocks and bonds issued by corporations that have a history of socially responsible actions? 2. What category of mutual fund invests in risk oriented common stocks of new companies that promise large returns? 3. What category of mutual fund divides their investments among stocks,

Finance: Net Present Value Measurements

11. The yield to maturity is: (Points: 3) the rate that equates the price of the bond with the discounted cash flows. the expected rate to be earned if held to maturity. the rate that is used to determine the market price of the bond. equal to the current yield for bonds priced at par.

4 problems: Stocks & Bonds for ABC Co, XYZ Co and Large Co

Problem 1 On January 1, 2002, the ABC Corpoartion purchased a six-year, 12% bond having a maturity value of $300,000. The bond was purchased at a market price of $288,000 and provides an effective interest rate of 13%. The bonds are dated January 1, 2002 and mature on January 1, 2008.

Bond Interest Payments, Price of a Bond and Yield to Maturity Question

Please help with the following problem. Provide step by step calculations. Assume it is early 2003 and the following bond quotations appeared in the Wall Street Journal: ConocoPhillips (COP) 5.900 Oct 15, 2032 95.972 6.200 90 30 88,510 Amerada Hess (AHC) 7.125 Mar 15, 2033 100.145 7.113 179 30 55,000 a. How much in an

Valuation of Bonds: price today, present value, yield

1. What is the price today of a 2-year 9% coupon bond that has a par value of $1,000 and a required rate of return of 9%? 2. You have invested in a bond that pays semiannual coupon payments of $40 and has a par value of $1,000. The bond matures in 1 year, and its required rate of return is 10% compounded semiannually. Determi

Coupon rate for a bond ,..

When I looked up a bond, it was listed, with errors in the coupon rate, as &@*'s of 21, and the market price was listed as $1025.17. The market interest rate of the bond is 7.2 percent annually. What is the coupon rate?

Financial Securities valuation - Bond Stock Valuation

Hi, I have questions for 2 problems , can somebody please help ? thanks Problem 1. Your uncle is interested in buying a certain stock, which he says is undervalued and should be worth $35 per share. He has asked for your help. The stock's dividend, currently at $1.10, is expected to increase at a rate of 5% per year forev

Stocks and Bonds: Risk premium, Bond Valuation, expected return

Need assistance with the following questions please in excel with detailed explanations. 1. Suppose the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium Industrial production (I) 7% Interest rates ( R) 3 Consumer confidence ( C) 5 T

Bonds: Determining the Value

Please help with the following problem: You purchased a $1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that point?

Calculate the Inflation Premium (IP) on 5-year bonds

Crockett Corporation has a 5-year bond yield of 6.85%, and 5-year T-bond yield 4.75%. The real risk-free rate is r* = 2.80%, the default risk premium for the company's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on the company's bonds is LP = 1.25%, and the maturity risk premium for all bonds is found wi

Swift Company: what is the nominal yield to call

Swift Company has a bond outstanding with 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's nominal yield to call?

Bonds

You are considering purchasing a bond at the end of this year. The bond has a coupon rate of 10.5 percent, interest payments are made annually and the bond matures in 20 years. If your required pretax rate of return is 14 percent, what is the maximum price you would be willing to pay for a 20-year, 10.5 percent bond? Assume t

Real Rate of Return Earned on Investments

Last year, I earned 8.7 percent on my investments while U.S. Treasury bills yielded 4.3 percent and the inflation rate was 4.6 percent. What real rate of return did I earn on my investments last year?

Cost of equity capital

David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and the company's tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.96 percent. What is the company's cost of equity capital?

Bond Valuation comparison of a 1 year and a 15 year bond.

An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year. A. What will the value of each bond be if the going interest rate is 5%, 8%, and 12%. Assume that there is only one more interest payment to be made on Bon

Yield to maturity, current yield capital gain & yield to call

A 10 year, 12% semiannual coupon bond, with a par value of $1000, may be called in 4 years at a call price of $1060. The bond sells for $1100. (Assume that the bond has just been issued.) a) What is the bonds yield to maturity? b) What is the bonds current yield? c) What is the bonds capital gain or loss yield? d) What is

Heymann Company's Bonds: Yield to Maturity

6-7 The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1000 par value; and the coupon interest rate is 9%. a) What is the yield to maturity at a current market price of (1) $829 or (2) $1104? b) Would you pay $829 for one of these bonds if you thought that the appropri

Determining Price of Bonds for Nungesser Corporation

Nungesser Corporation has issued bonds that have a 9% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000 and a yield to maturity of 8.5%. What is the price of the bonds?

Bonds: current yield, yield to call, price

1. A newly-issued corporate bond has 20 years to maturity. The bond has a coupon rate of 8 percent and pays interest semiannually. Also, the bond is callable in 6 years at a call price equal to 115 percent of par value. The par value of the bonds is $1,000. The yield to maturity is 7 percent. a. What is the bon

Theoretical market value using semiannual analysis: Pacific Western Corporation

Pacific Western Corporation pays an 11 percent coupon rate on debentures that are due in 20 years. The current yield to maturity on bonds of similar risk is 8 percent. The bonds are currently callable at $1,060. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Fin

Price of a Bond: Bond Valuation for Complex Systems

Complex Systems has an outstanding issue of $1,000-par value bonds with a 12% coupon interest rate. The issue pays interest annually and has 16 years reamining to its maturity date. a. If bond of similar risk are currently earning a 10% rate of return, how much should the Complex Systems bond sell for today? b. Describe th

Solve: Default Risk Premium on a Corporate Bond

Question: A treasury bond that matures in ten years has a yield of 6 percent. A 10 year corporate bond has a yield of 8 percent. Assume that the liquidity premium on the corporate bond is .5 percent. What is the default risk premium on the corporate bond?

Current Yield, Yield to Maturity & Effective Annual Yield

The 7 percent coupon bonds of Firm X are selling for 102 percent of par value. The bonds mature in 6 years and pay interest semiannually. What is the current yield, yield to maturity and effective annual yield? 1. 6.86; 6.59; 6.70 2. 6.86; 6.23; 6.53 3. 6.37; 6.23; 6.53 4. 6.37; 6.59; 6.86 5. 6.59; 6.65;

Implied Treasury bond rate

Looking at the Wall Street Journal you observe that the settlement price on a hypothetical 15-year, semiannual payment, 6% coupon bond is 109 9-32. If the bond has a $1,000 par value, what is the implied Treasury bond rate? 5.11% 5.55% 5.91% 6.35% 6.79%

FINANCE calculations: NPV, ROE, MRP, CAPM, WACC, IRR, Beta and others

Please see attach document. 1. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to _________. (Points: 10) maximize its expected total corporate income maximize its expected EPS minimize the chances of losses maximize the stock price per

Bonds and Stocks in a Market

Bond No. Maturity Coupon Price Yield to Maturity 1 2 years $50 $992 ? 2 3 years $45 ? 5.52% 3 4 years $60 $1,015 ? 4 6 years $54 ? 5.82% (a) Compute the yi

Present value or price of bond

I have a $1000 bond which matures in 10 years with current market interest rate of 8%.If I know that the bond pays $30 every six months, then how can I find out what the yield to maturity is, expressed on a semiannual basis. I need the yield to maturity rate in order to calculate the present value of interest payments and the p